FRIDAY, MARCH 24, 2000 9:00 A.M.






A.                 CALL TO ORDER

            Chair Robert Jehn called the meeting to order at 9:00 a.m.


B.                 ROLL CALL

            Directors present:  Chair Robert Jehn, First Chair David Ripple, Allan Hemphill, Jack McKellar, Daniel  

            Opalach, Robert E. Simonson, and Max Schlienger.  Also present:  Executive Director Max H. Bridges,

            General Counsel Christopher J. Neary, Property Manager Cyndee Logan, Consulting Accountant Russ

            Mustola, and Administrative Assistant Pamela Fishtrom.


C.                 AGENDA APPROVAL

            Chair Jehn announced approval of the Agenda.


D.                PUBLIC COMMENTS

            Fred Carmichael of Eureka recommended the meeting begin with a prayer or a moment of silence. 

            Chair Jehn asked Executive Dir. Bridges to investigate the rules regarding such action.  Mr. Neary

            recommended waiting until a similar decision is made regarding student initiated prayer in schools.   


E.                 CONDUCT OF BUSINESS

1.                  Further Consideration of Federal Emergency Management Agency (FEMA) Alternate

                        Project Proposal        

            Executive Dir. Bridges reported the Environmental Assessment (EA) comments need to be addressed,

            but are not insurmountable, just time consuming.  NCRA’s response to the comments dictates whether

            FEMA, as lead agency, prepares a response to the comments, issues another EA, or prepares an

            environmental impact  statement.  Mr. Neary reported the Alternate Project typically excludes future

            FEMA eligibility; however, Harry Sherwood has indicated FEMA may consider the Railroad, if repaired

            through the canyon to Class I, a new facility, therefore, reinstating eligibility.  The EA project

            description identifies repair to the existing facility to utility with the exception of permanent repair to    

            several landslide prone areas.  The Alternate Project predicates creation of a new facility.  Invoking

            Surface Transportation Board jurisdiction in construction of the new facility allows them to become the

            lead agency in terms of environmental issues.  In addition, Mr. Neary indicated that of the EA comments

            95% can be summarily dismissed and the rest can be mitigated. 


            Chair Jehn read a letter from the Humboldt County Board of Supervisors requesting NCRA take no

            action to deviate from the Improved Project plan. 


            Mr. Darling, President of Rail-Ways, Inc., indicated the STB historically declines to undertake

            modification of existing facilities.  Although when involved there is a high degree of protection from

            outside agencies.  He also spoke of his concern over the application of FEMA’s Landslide Policy

            throughout the canyon.  Mr. Darling discussed his amended proposal which includes aspects of both the

            Improved Project and Alternate Project.  He recommended designating the Somoa branch and south of

            South Fork as Alternate Projects allowing for the release of $5 million to reduce $2,350,000 debt to    

            FEMA creditors, reopen the South End to Willits for $494,000, and make improvements to the Railroad.                                                                                                                                                       

            Signal repair is needed in Willits, the only place where the Emergency Order is lifted.  Segmenting the

            line moves forward commercial interests, satisfies the burden of creditors, and is allowable by FEMA as

            long as the purpose is not to avoid environmental issues.  Mr. Darling insists this project does not

            deviate from NCRA’s 5-Year Business Plan to restore service.  If his proposal is implemented, Mr.

            Darling conceded to connect the track by repairing those blocks selected under the Alternate Project to

            the February, 1998, condition for use by work trains, passengers, and equipment.  


            Dir. Hemphill recommended building consensus with proponents of the North End by discussing the use

            of Intermodal Surface Transportation Enactment Act (ISTEA) funds on the North End.  Mr. Bridges

            indicated that the use of ISTEA funds involve development, not repair, and the requirements by

            CalTrans will be stringent, but the money will be available under either alternative. 


            Mr. Poulsen, Chief Engineer of Northwestern Pacific Railway, indicated the line could be open from

            Eureka to Scotia in one month. 


            Mr. Bridges reported Alternative Project funds can not be used to pay interest.  It is unlikely regular time

            labor for emergency repairs would be eligible.  Additional work to reopen the South End is eligible, plus

            the amount for work that has been completed and is in excess of the funds available including signal

            work.  Past disaster work can be eligible, OES found $1.1 million that is possibly eligible.  If the

            program side of FEMA shows the work is eligible, the environmental side must agree that all necessary

            environmental issues were resolved, and the documentation must be adequate. No monies would be

            available for Rail-Ways under this proposal for probably 60 days.  There is also no discretionary money

            available under the fiber optic agreements as all lease revenue is pledged to the Q-fund. 


            In response to Dir. Opalach, Mr. Darling said the he would use approximately $565,000 of the money he

            receives from the Project to repair the North End track to maintenance standard.  From maintenance

            standard to Class 1 costs $900,000-$1 million.  That funding must come from other sources, possibly

            ISTEA or fiber optics easements.  The environmental costs must come from the total project costs as



            Several Board Members shared their discomfort with relying on FEMA to guarantee future eligibility of

            the North End.  Chair Jehn added the Governor’s office publicly announced transportation funds will be

            available for the Railroad. 


            Dir. Hemphill motioned to continue this item to the next Regular Meeting rescheduled April 12, 2000, in

            Eureka; seconded by Dir. Schlienger.  Role call vote taken:  Dir. Opalach, aye; Dir. Hemphill, aye; Dir.

            McKellar, aye; Dir. Schlienger, aye; Dir. Simonson, no; Dir. Ripple, aye; Chair Jehn, aye; motion



            At 11:10 a.m. Chair Jehn announced a recess.  The meeting reconvened at 11:15 a.m.


2.                  Consideration of Request by Rail-Ways, Inc. and Herzog Contracting Corp. Regarding  

                        Distribution of Disaster 1203 Funds

            Executive Dir. Bridges reported this agreement represents consensus between Herzog and Rail-Ways as

            to distribution of Disaster 1203 funds.  Mr. Neary indicated this agreement would replace a previous

            three-way agreement assigning Disaster 1203 funds.   Dir. Schlienger motioned to accept the agreement

            subject to approval by the California Transportation Commission;  seconded by Dir. Hemphill.  Vote

            taken; motion passed unanimously. 


3.                  Action on Standstill Agreement – Secured Creditor

            Item to be heard after Closed Session.


4.                  Acceptance of Single-Year Audits for Fiscal Year End 1995 and 1996

            Item taken together with Item E.5.



5.                  Acceptance of Single-Year Audits for Fiscal Year End 1997 and 1998

            Dir. McKellar motioned to accept the single-year audits for fiscal years ending 1995, 1996, 1997, and

            1998; seconded by Dir. Schlienger.  Vote taken ; motion passed unanimously.


F.                  CLOSED SESSION – Convened at 11:30 a.m.

1.                  Conference with Legal Counsel – Potential Litigation

                        Government Code Section 54956.9(a)


2.                  Conference with Legal Counsel – Consider Initiating Litigation

                        Government Code Section 54956.9


3.                  Conference with Real Property Negotiator

                        Government Code Section 54956.8

                        Negotiating Parties:  Pacific Bell; NCRA

                        Under Negotiation:  Longitudinal Easement


G.                ACTION TAKEN IN CLOSED SESSION – Reconvened at 12:10 p.m.

1.                  Conference with Legal Counsel – Potential Litigation

            This item was continued to the next meeting.


2.                  Conference with Legal Counsel – Consider Ititiating Litigation

            General Counsel Neary reported on this item and was given direction by the Board.


3.                  Conference with Real Property Negotiator

            Property Manager Logan reported on this item and was given direction by the Board.


            Agenda Item E.3 was continued to the next meeting by request of Mr. Darling, President of Rail-Ways.                



            The meeting was adjourned at 12:15 p.m.