Originally, the Otter Creek was yet another of the approximately billion logging railroads that littered the state of Oregon, taking logs from up Otter Creek (approximately 6 miles due east from Gardiner) down Otter Creek & the Smith River (via a short section of the Southern Pacific’s Coos Bay branch) to Bolon Island and an interchange with International Paper’s Longview, Portland, & Northern.
Oddly, this line lasted into the 1960s as a logging railroad, but finally logged out the last section of timber in 1962, at which point it went idle until it was purchased for a tourist railroad in 1967. The tourist railroad ran with a 6-coupled tank engine for ~6 years (when it massively failed a boiler inspection and was retired) and then some magic happened; The Penn Central still had two of the NYC’s Lima A-3174’s in service, but was planning on trading them in until the Otter Creek purchased them and shipped them out west.
They’d both been reengined with EMD 567s, but one of the engines was blown, so both units were sent to ILW for remanufacture, with 8399 getting an Alco 251D-6 and 8398 getting the best parts out of the two 567s.
They were a great hit, and kept the railroad profitable first hauling tourists up Otter Creeks, and then when winter storms washed out the entire railroad, from Coos Bay to Gardiner on the SP & LP&N. This lasted until 2007, when the CORP shut the Coos Bay branch down, forcing the Otter Creek’s excursions down to the (otherwise disused) LP&N. This situation staggered on until early 2009, when the Otter Creek finally threw in the towel and was purchased by the Port of Coos Bay at the same time the port purchased the entire Coos Bay branch.
When the Port took over the Otter Creek, 8399 had been out of service because of some 251 glitch, and 8398’s 567 was leaking enough oil so it had an exhaust like an Alco. So while the Port was working on fixing up their new railroad they also sent 8398 back east to ILW to get the engine replaced with something more modern, and getting it back as an ILW LRS-1238 (reengined with a Cummins QSK38, as well as a AC drivetrain that ILW pulled from a parts engine.)
By 2011, Coos Bay Rail Link had rebuilt enough of the line so that the Otter Creek excursion trains could start running again, and they continue to run (between Coos Bay and Coquille, with the occasional special excursion all the way across the Coast Range to Eugine.)
In 2022, #8398 was updated – again – to Tier 4F standards, and in 2023 #8399 was shipped to ILW to see if they can restore it to how it looked when it came out of the Lima works.