PALESTINE — The current operator of the Texas State Railroad said the final financial straw before the decision to sell the rail line was the cleanup costs of a large diesel spill at the Rusk depot.

Allen Harper, CEO of American Heritage Railways, committed to keeping the railroad running through the year until the cleanup costs of a diesel spill on March 1 tallied over $250,000.

“That diesel spill has been a tremendous burden,” Harper said. “I was already tight on cash, as everyone knows, but I decided I was going to stretch it.”

American Heritage has experienced cash-flow issues since February. The company asked for loan forgiveness and cash assistance from the two cities of Palestine and Rusk as well as the Texas State Railroad Authority in early February. Both cities lowered the interest rates on $500,000 loans they each gave to the railway and deferred payments in late February and early March, but did not approve additional cash assistance.

Harper said it costs about $150,000 a month to keep the railroad operating in the slower summer months, and he set aside money to keep the line open to the fall when there are more rail events and a greater chance of profit.

“I have a 30-foot hole that I’ve spent $250,000 on, and it wiped out the cash to get to the fall,” he said. “It put the nail in the coffin, so to speak, for us to look at other directions to keep the railroad operating.”

He said there is still contaminated soil in the hole, and said he was faced with the option of digging more dirt or continuing to run trains.

The Texas State Railroad Authority approved spending another $150,000 on cleanup efforts on Thursday, which members hope will be enough to complete the job.

Steve Presley, president of the TSRA, said the board feared if it did not act quickly, rain would make the project more expensive.

Officials with American Heritage and the TSRA claim the spill was caused by a faulty system installed by the Parks and Wildlife Department, on land they said is still technically owned by the department. Presley said because of how deep and extensive the contamination runs, the environmental company contracted said it believes it is from a previous spill many years ago.

Harper said he would need the TSRA’s help in reclaiming the funds thrown down the proverbial put.

“Texas Parks and Wildlife has, of course, disavowed any responsibility for it, but then I also talked to the lieutenant governor’s office about seeing if they could help in some way to convince Texas Parks and Wildlife that they were responsible,” Presley said.

“At this point, if we talk them into paying for it or get funds reimbursed from the legislature, it will probably take a year to get the money, but I think there is a reasonable chance we can hope to get funds out of them in the next legislative session,” Presley said.

Harper said he is sad to pass the railroad to its potential new operator, Iowa Pacific Holdings, because it was very close to breaking even. But after loosing $3 million on the railroad already, he said he could not afford it anymore.

“I don’t really want to leave because I love that railroad,” he said. “It is such a neat place, but on the same token, we have gotten it so far and yet we need to get some more income in there and this will do it.”

However, Harper owns Rail Events Incorporated, which owns rights to many events including the Polar Express, the Lone Ranger and the Peanuts excursions.

“I will still continue to be involved ... I just won’t be an owner like I have been, but that’s OK,” he said.