Project Profile: Sooner Subdivision Freight Line, Sapulpa and Midwest City, Oklahoma

Sooner Subdivision line, Sapulpa and Midwest City, Oklahoma

Oklahoma

Oklahoma Department of Transportation (ODOT)

Asset Recycling

Freight Rail

In 2014, the Oklahoma State Transportation Board voted to sell the Sooner Subdivision line between Sapulpa and the Midwest City suburb. Stillwater Central Railroad (SLWC), the company that had been leasing the nearly 100 miles of rail line, placed a winning bid of $75 million. The bid also included financial commitments for enhanced rail access to energy infrastructure in Cushing, track improvements from a Class 2 to a Class 3 track within seven years, and developing a six-month trial run of passenger rail services within five years. SLWC, owned by Watco Companies, LLC, announced plans to work with Iowa Pacific Holdings to operate the passenger line. In total, SLWC operates more than 275 miles of track in Oklahoma.

As of 2014, Oklahoma had attempted to preserve 882 miles of state rail corridors facing abandonment by purchasing them. With the sale of the Sooner Subdivision line, 749 miles of state-owned rail lines have been returned to the private sector.

In August 2014, the Oklahoma Department of Transportation has completed the $75 million sale of nearly 100 miles of railroad track to Stillwater Central Railroad LLC. ODOT and railroad officials signed the sale agreement Monday afternoon in Oklahoma City. Plans for the rail line include passenger service and hauling of freight, including crude oil.

The $75 million the state receives from the sale will go into the Railroad Maintenance Revolving Fund where it will be used for such things as maintaining and improving state-owned railroad lines and railroad crossings, said Mike Patterson, executive director of the Oklahoma Transportation Department. Some of the money also could be used to purchase other railroad lines if private companies go bankrupt or decide to abandon lines, he said.

$75 million; The $75 million the state receives from the sale will go into the Railroad Maintenance Revolving Fund where it will be used for such things as maintaining and improving state-owned railroad lines and railroad crossings.

Watco Cos, owner of the Stillwater Central Railroad Company (SLWC), Equity Provider

Privatization, the Oklahoma Transportation Commission sold the Sooner Sub line, a railroad between Sapulpa and Midwest City, for $75 million to the Stillwater Central Railroad, LLC.

Stillwater Central Railroad

KPMG, Financial Advisor to ODOT

N/A

10 years

The sales agreement requires Stillwater Central to establish a six-month trial run of daily passenger rail service on the line within the next five years. The company is free to establish its own schedule and ticket costs and to decide whether to continue the program at the end of the trial period. The company would be required to pay the state $2.8 million if it fails to start the pilot passenger service program within 5 years. It also would be required to give a passenger rail easement back to the Transportation Department if it is not operating passenger rail service after 10 years.

On August 5, 2019, the Stillwater Central opted to default under the agreement and pay the contractual $2.8 million penalty for not establishing the service. However, the company had accomplished the upgrading of the rail line as agreed.

• The agreement includes several provisions, including a passenger rail service trial run to determine viability, penalties if promised capital commitments do not materialize, a provision ensuring that current customers continue to be served, and that the line is accessible to all railroads.
• With the $75 million sale of the Sooner Sub rail line into the Railroad Maintenance Revolving Fund where it will be used for such things as maintaining and improving state-owned railroad lines and railroad crossings
• Railroads played key role in converting the previous frontier into one of the largest energy and agricultural producing regions of the United States.

• Press Release: Vote Returns Sooner Sub Rail Line to Private Ownership
• State board votes to sell Sooner Sub rail line to existing lease holder
• ODOT, Watco sign off on Sooner Sub rail line sale to Stillwater Central Railroad
• New rail line ownership could be the next step for those commuting to Tulsa
• Oklahoma DOT Seeks to Sell off State Owned Freight Rail Lines
• Passenger Rail Update: ODOT Transfers Track to Private Firm

Jared Schwennesen
Rail Programs Division Manager
(405) 521-4302