Investors in Adirondack rail line are willing to bet big
By Tim Rowland
The winning bidder of a 30-mile rail spur through the wilderness plans to spend $19 million on a multi-pronged venture to harvest minerals from old mine tailing piles, enhance tourism and recreation and rebuild freight and passenger service essentially from scratch.
Carol McLean-Wright and her husband John Wright, as Doc N Dutchess Rails LLC, purchased the Saratoga and North Creek Railway at a bankruptcy auction this month for $3.33 million. But the Wrights’ plans go beyond purchase of the railroad, whose chief assets are the tracks and an easement that’s good for another 40 years.
“We’re going to be developing jobs, economic activity and tourism appeal,” McLean-Wright said.
The first machinations of that project began this week, said bankruptcy court trustee William Brandt Jr., who is submitting the Plan Administrator’s Report of Auction for Court Approval. It must also be reviewed by the federal Surface Transportation Board, with a tentative closing date of May 6.
Then the real work will begin. In size, scope and degree of difficulty, the plans in some ways call to mind those of the 18th century industrialists who found iron ore on virtually the same grounds and plotted developments along the headwaters of the Hudson River, where Teddy Roosevelt was staying in 1901 when he learned President William McKinley had been shot.
The wilderness eventually won out, and critics believe it will do so again. Other procedural, financial and structural hurdles remain for plans involving an industry that some conservationists believe has no place in the Adirondack Park.
McLean-Wright said her role will be to find investors, while the industrial side will be handled by a team of experts in their respective fields. Her husband, who she said is a virologist and former arms inspector in Iraq, will lend a scientific and educational perspective to the project, emphasizing the area’s geology and taking advantage of dark skies for astronomy tourism.
The other bidders
The Wrights’ bid for SNCR beat out West Coast scenic rail and freight hauler Sierra Railroad, and Revolution Rail, a rail-biking company that operates several hubs, including one on the southern end of the line in North Creek.
Sierra, the only traditional railroad to bid, objected to the proceedings on the grounds that the other two participants were not legitimate railroads. David Rohal, vice president of corporate projects for Sierra, said “it didn’t seem right” that entities with no rolling stock and no experience running railroads should be contenders. Sierra, which had wanted to run freight and tourist trains, along with a rail-biking operation, does not plan on further contesting the results, Rohal said.
Prior to the auction, a federal bankruptcy court had ruled that only companies intending to maintain the railroad would be permitted to bid. That knocked out another potential buyer, the Open Space Institute, which was interested in purchasing the line for a rail trail, a pursuit that had the backing of the state Department of Environmental Conservation.
Use of the rails south of North Creek will also have to be negotiated with owners of two other 30-mile sections of track to the south owned by Warren County and the Town of Corinth. The Wrights had business dealings in Warren County, reviving a bankrupt dude ranch in 2016. McLean-Wright said they exited the business in 2019 due to a health issue.
Warren County Director of Public Affairs Don Lehman said that the county had no comment on the sale, but that any resumption of rail service on the line would have to be negotiated. The county has been maintaining the tracks, and they are in good shape, he said.
The Wrights’ ambitions for the line center on restoring the railroad between Tahawus and North Creek. It has operated in fits and starts since the last load of titanium oxide was shipped from the National Lead Company’s mine in 1989.
From there, the Wrights hope to buy the mine itself, restore its historic name of Tahawus, and begin sifting through millions of tons of tailings to recover ilmenite, cobalt oxide and a dozen other minerals that have applications in everything from pigments to advanced electronics. The rail, which will keep the Saratoga & North Creek Railway nameplate according to the Wrights, would be available to other industries in the corridor, most notably Barton International, which mines garnet for use in industrial abrasives.
Sierra’s Rohal said that although be believed the railroad sold for more than it was worth, it represents “a good business opportunity,” particularly as new federal infrastructure money starts to flow, creating demand for road building materials.
All bidders were financially vetted, said Brandt, the bankruptcy court trustee, “and frankly, the Doc N Duchess entity was the most well-heeled of all three, meaning there are no concerns about closing.”
The Wrights said they also plan to work with Revolution Rail, which would like to continue its North Creek operations and open a new rail biking enterprise in Newcomb. And they say the track could be used for other recreational pursuits. Hikers, for example, might one day be able to hitch a ride to whistle stops along the line, where they could disembark, camp for a few nights and then catch a ride south, said Jeff Hagan, the new president of SNCR.
Rob Harte, whose Revolution Rail was the third bidder, said he and the Wrights have conversed, and he’s optimistic his company can maintain its operations in North Creek and expand into Tahawus. “There’s a lot of potential and a lot of excitement,” he said. “We’re excited to explore Newcomb — we feel like that’s an area that’s really going to pop.”
Bringing back industry?
Plenty of others believe in Newcomb’s ascension as well, although there are contrasting views on how it should happen. The state, some conservation groups and many in the hiking/biking community had hoped the 80-year-old line, built by the government in the heat of World War II, would fade peacefully back into the forest as a low-impact rail trail.
The Department of Environmental Conservation, in a matter that is still pending, has asked the federal Surface Transportation board to abandon the line with the long-term goal of ripping up the rails. But now that Doc N Dutchess has announced its intentions, the federal government is unlikely to agree to abandonment, said Newcomb Supervisor Robin DeLoria, a supporter of the Wrights’ endeavor.
But the state will still potentially have a say in the final outcome. The Tahawus mine is owned by Mitchell Stone Products, and the DEC would have to approve any transfer of its permits should it be sold.
Mitchell Stone Products, the DEC said, can only mine stockpiles from the previous mining operation. “Any additional operations would require DEC review and authorization,” a DEC spokesman said. “ Any change in ownership would require transfer of the permit.”
Mitchell currently trucks aggregates for roadbeds and other construction projects, a business Doc N Duchess plans to continue — although with more efficient freight cars that are easier on the environment and not a detriment to North Country roads, Hagan said.
Bob Kline, interim president of mining operations for the Wrights, said there will be no new digging or industrial or chemical separating processes at the site. Millions of tons of old mining waste, over the course of about two decades, would be shipped to covered yards off-site for mineral extraction.
Today, Kline said, newly relevant nanomaterials in the mining wastes have markets in advanced electronics. “We’ve found uses for some of the stuff we thought of as trash,” he said, adding that today’s technology has improved the extraction of useful minerals.
Kline said national security and domestic supplies of metals is also a driving force behind the project. The two top suppliers of titanium are China and Russia, with Ukraine coming in at No. 5. Similarly, China has a corner on the market of rare earth elements, small but essential ingredients of many modern technologies — lasers, night-vision goggles, batteries, smart phones, to name a few.
“China and Russia are not the sort of suppliers that we want to rely on,” Kline said. The federal government agrees. The 2021 National Defense Authorization Act instructs the Pentagon’s suppliers to wean themselves of critical elements produced in China, which has 80% of the world’s refining capacity.
Still, from a policy and economics standpoint, it’s a difficult environment for minerals, said Ian Lange, an associate professor of mineral and energy economics at the Colorado School of Mines. “The U.S. doesn’t do mining very well,” he said.
What rare-earth elements are mined domestically, for now, have to be shipped to China for refinement, and more common ores, like titanium, are subject to Chinese market manipulation. When a titanium consumer begins to talk with a new supplier, the Chinese suppliers typically cut their prices to retain the business, Lange said.
Kline said Doc N Duchess have a cost advantage though, because material does not have to be dug from the ground at considerable expense. And rather than opening or expanding a new pit, removing material will “clean up” the site, he said.
Rails and recreation
Hagen said he’s acutely aware that industries and the park’s regulators sometimes have strained relations, such as when the Iowa Pacific Railroad mothballed more than two dozen tanker cars on a wilderness siding in 2018.
Conservationists and rail advocates alike today recognize this as a blunder that fueled interest in converting the line into a recreational trail, and hardened opinion against the railroad. Iowa Pacific’s legacy was “bad debt and bad publicity, and we want to make sure that does not happen again,” Hagan said. “It is very irresponsible to put junk in these beautiful mountains.”
Not all hiking and conservation groups are convinced. “Our thoughts are firstly that it represents an economic development strategy that looks longingly backwards at an industrial and rail line era that has long since passed away,” said Peter Bauer, director of Protect the Adirondacks.. “Secondly, the future is a recreation trail. This effort will delay the inevitable by a decade.” The success of the Lake Placid to Tupper Lake trail “will leave many in Warren County drooling for the same,” he said.
Hagan pledged there will be no more wholesale railcar storage on the line, and estimated that about 10 to 20 freight cars a week would roll down the tracks, leaving ample opportunities for recreation. The concern with mixing freight and recreation is liability, Hagan said, but he believes both can co-exist safely.
The company is in the process of buying the locomotives and passenger cars it will need to begin operations. Hagan said the track will take some work and money to get back into shape, but that it was built to wartime standards and is in remarkably good shape.
Doc N Duchess president Michael Rogers said he hopes environmental groups will give the company a chance. “I don’t consider their concerns insignificant or inappropriate,” he said. “I’d like to find a way we can co-exist and make things better.”
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