Port of Pend Oreille buys a railroad on September 19, 1979.

  • By Kit Oldham
  • Posted 1/26/2011
  • HistoryLink.org Essay 9698
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On September 19, 1979, the Port of Pend Oreille celebrates its purchase of a 61-mile railroad line from the bankrupt Chicago, Milwaukee & St. Paul Railroad (known as the Milwaukee Road) by presenting a symbolic check for the $1.385 million purchase price in a ceremony at the Pend Oreille County courthouse in Newport. The rail line, which the Port names the Pend Oreille Valley Railroad (POVA), follows the Pend Oreille valley in the far northeast corner of Washington north from Newport through Usk, Cusick, Tiger, and Ione to Metaline Falls near the Canadian border. The ceremony comes one year to the day after county residents voted to create the port district to acquire and run the line, which the Milwaukee Road planned to shut down. The Port's acquisition of the railroad saves (for a time) two of the county's largest employers -- a cement plant in Metaline Falls and a timber mill in Ione -- which depend on the line for shipping. Although both plants will later succumb to changing economic times, POVA will continue to operate, serving other shippers in the Pend Oreille valley, running excursion trains through Box Canyon, and eventually expanding its service into Idaho.

Idaho and Washington Northern Railroad

The railroad line that eventually became the Pend Oreille Valley Railroad was built between 1909 and 1911 as part of the Idaho & Washington Northern Railroad (I&WN), which originally ran southward from Newport to McGuires, Idaho, near Post Falls. The I&WN was constructed by Frederick Blackwell (1852-1922), whose numerous businesses in northeast Washington and the Idaho panhandle included a large timber mill at Ione and an interest in the Inland Portland Cement Company in Metaline Falls. Blackwell extended the I&WN north from Newport through Ione to Metaline Falls to bring lumber and cement to the transcontinental Great Northern line at Newport. Although all three towns are located on the Pend Oreille River, the river flows north, making it an impractical means of transporting large cargo south to Newport.

Blackwell soon encountered economic difficulties and the Milwaukee Road took over operation of the I&WN; it purchased the line in 1916, shortly after the Lehigh Portland Cement Company acquired the cement plant. The railroad line flourished, along with the timber and cement industries, for the next half century. From the 1930s through the 1960s, traffic was brisk as trains carried cement from Metaline Falls to the dams being constructed on the Columbia and Snake rivers as part of the massive Columbia Basin Project.

However, by the late 1970s railroading was in decline nationally for a variety of reasons, including increased competition from trucking and barge transportation. In 1976, the Milwaukee Road abandoned the portion of the former I&WN line running south from Newport, and in 1977 it announced that it would cease operating the 61-mile stretch from Newport to Metaline Falls.

Port of Pend Oreille

Losing its rail line would have been a devastating blow to sparsely populated Pend Oreille County, which was already struggling economically. In 1977, fewer than 1,000 of the county's 8,000 residents were employed in regular full-time jobs, and nearly one-third of those worked at the Lehigh Portland Cement Company or at Louisiana Pacific's lumber mill at Ione (the successor to Blackwell's mill). Both plants remained dependent on rail transport, so abandoning the line would have closed two major employers, costing Pend Oreille County a substantial portion of its existing job base.

By December 1977, county residents began organizing to find a way to save the rail line. After Burlington Northern (now Burlington Northern Santa Fe), the largest railroad in the region, turned down a request to take over the line, local leaders concluded that forming a public port district would be the best means to acquire and run the crucial rail link. The Washington legislature first authorized port districts in 1911, for the purpose of developing harbor areas, and over the years, as the port district structure proved to be a successful means of promoting local economic development, expanded port district authority to cover a whole range of transportation and industrial infrastructure.

In Pend Oreille County, proponents envisioned the port district as a conduit to receive federal grants to fund the railroad purchase and needed upgrades to the track. Although port districts have authority to levy property taxes and most do, supporters of the proposed Port of Pend Oreille promised not to exercise that power (the Port has kept the promise). Organized by Neal Margoles, who would go on to serve as the new port's first manager, the campaign to form a port district to buy the railroad line raised $1,200, which as it turned out was approximately one dollar for each favorable vote on the proposal. To the surprise of some, the traditionally conservative Pend Oreille County electorate approved creation of the port district by a vote of 1,263 to 1,008 on September 19, 1978.

With no funds of its own, the new port, headed by commissioners Franklin Billings, Wilson Lowe, and John McLaughlin, looked to the federal government for assistance in acquiring the railroad. The Business Development Center at Washington State University helped the commissioners and Margoles put together a funding proposal, even utilizing a WSU historian to compile the history of the line from its beginning as part of the I&WN. Probably more important was the political clout of Senator Warren G. Magnuson (1905-1989) and Representative Thomas S. Foley (1929-2013), who helped the Port win a $1.05 million federal grant. Even after Margoles negotiated the Milwaukee Road down from its original asking price of $2.8 million to $1.385 million, a gap remained between the federal funding and the purchase price, which the Port filled by getting potential shippers on the line to buy bonds.

Pend Oreille Valley Railroad

On September 19, 1979, exactly one year after the vote to create the Port, the purchase was formalized when Port officials presented Milwaukee Road Vice President Edward Stolle with a check for $1,385,000 in a ceremony held at the Pend Oreille County courthouse in Newport. The check was symbolic (although approved, the funds had not yet arrived), but the purchase was real. The Pend Oreille Valley Railroad began operating just after midnight on October 1, 1979, using cars leased from the Milwaukee Road and Burlington Northern.

To operate POVA, the Port initially contracted with Kyle Railways, a private company that ran branch lines around the country. Kyle supplied the locomotives and train cars and Kyle employees, headed by Bud Sargent, ran the railroad. It was Sargent who proposed that POVA run passenger excursion trains on the line. The North Pend Oreille Valley Lions Club (of which Sargent was a member) organized the first excursion train in July 1981, as part of Ione's annual Down River Days celebration. Lions Club excursion train rides from Ione to Metaline Falls through the dramatic gorge of Box Canyon above the Box Canyon dam have been part of POVA's operations ever since.

With the railroad up and running, the Port turned to rehabilitating the dilapidated track. Additional federal and state grants funded the replacement of 80,000 railroad ties and laying of new ballast, not to mention repairs of occasional washouts. In October 1984, the Port took over direct operation of POVA from Kyle. Since then the Port has operated the railroad itself, maintaining the track and the fleet of locomotives and other equipment that it owns.

Although creation of the port district saved the Pend Oreille Valley Railroad, the two plants that the railroad was initially preserved to serve eventually succumbed to the changing economy. The big lumber mill in Ione was sold to Vaagen Brothers Lumber, and after years of economic struggles was finally closed and dismantled (Vaagen Brothers continues to operate other facilities in the region). The Metaline Falls cement plant was also sold and eventually demolished. Lafarge, an international cement company, bought it in 1990 and gradually decreased production. The plant itself was torn down in 1996, but Lafarge continues to use the large storage silos to stockpile cement, resulting in occasional train runs to the site. Only one major shipper remains on POVA's original 61-mile line. The Ponderay Newsprint Company, owned by a partnership of five newspaper publishers and a major newsprint manufacturer, ships newsprint, recycled paper, and chemicals from and to its plant at Usk.

Expansion into Idaho

Needing additional shippers for POVA to survive, in 1998 the Port took advantage of an opportunity to extend its operations along a 20-mile stretch of Burlington Northern Santa Fe (BNSF) track reaching into Idaho. That spring the Port signed a 20-year lease with BNSF for a branch line running from Newport to Dover, Idaho. In addition, the Port obtained trackage rights that allow POVA trains to operate as far as Sandpoint, where they interchange with BNSF. Acquisition of the Idaho track allowed POVA to add shippers and led to a record jump in railroad income in 1999. As of 2011, companies shipping goods and supplies via POVA include Ponderay Newsprint, Lafarge North America, Malloy Lumber, Vaagen Brothers Lumber, Idaho Forest Group, Stimson Lumber, and Tri-Pro Cedar Products.

Recently, in addition to operating POVA, the Port of Pend Oreille has worked in other ways to attract business to the region and promote local economic development. It is currently (2011) working with the Tri-County Economic Development District (TEDD), the City of Newport, and other agencies to develop an industrial park on Port-owned land in Newport.

However, the railroad remains the Port's main endeavor. The Port's 13 full-time employees (with additional summer help) handle all the rail operations and maintain more than 80 miles of track. Working in a shop building that the Port constructed in 1999 at its headquarters in Usk, Port employees service not only POVA's own locomotives and equipment but also equipment from other lines that contract with the Port for service.

Track operations provide most of the Port's income. Additional revenue comes from fees paid by the Pend Oreille Public Utility District to run power transmission lines from its Box Canyon Dam hydroelectric plant along the POVA right of way. The Port of Pend Oreille remains one of the few port districts that does not collect a property tax.


Larry Young, "Pend Oreille Buys Railroad," The Spokesman-Review, September 20, 1979, p. 6; "The County Lines," Ibid., November 26, 1998, p. B-3; "The County Lines," Ibid., January 5, 1999, p. B-3; "County's Ambitious Idea -- Run a Railroad," The Seattle Times, September 8, 1978, p. B-2; "Pend Oreille Voters OK Railroad Purchase," Ibid., September 21, 1978, p. B-10; Stephen H. Dunphy, "'Little Guys' Are Trying to Save Their Way of Life," Ibid., June 24, 1979, p. C-9; Don Duncan, "Newport: A Tipsy-Floored Tavern and a Brand New Railroad Keep Things Rolling Along in this Remote Small Town," Ibid., October 26, 1980; Bill Dietrich, "Job Training: Pend Oreille County is on Track to Recovery," Ibid., June 27, 1983, pp. A-1 & A-12; Bruce Kelly, "The Two Hats of the Pend Oreille Valley Railroad," Trains, May 2008, Vol. 68, No. 5, p. 56; Port of Pend Oreille website accessed October 14, 2010 (www.povarr.com); "Ponderay Newsprint," The McClatchy Company website accessed January 27, 2011 (www.mcclatchy.com/2006/06/12/389/ponderay-newsprint.html); HistoryLink.org Online Encyclopedia of Washington State History, "Pend Oreille County -- Thumbnail History" (by Laura Arksey), http://www.historylink.org/ (accessed October 3, 2010).

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