In March 1985 the SP filed to abandon the line and the abandonment was approved 5 months later. The county stepped in to save the route, vital to local businesses and the state legislature enacted a law permitting local governments to own railroads outside of the state, and then the Oregon State Lottery agreed to fund up to 85% of the purchase price if the county could find an operator. The county went to work, and the Great Western Railway, an established shortline based out of Colorado, agreed to operate the line on a contract basis. Lake County purchased the line from SP on January 18, 1986, to keep the line open. The county contracted with the Great Western Railway to operate the line.
The LCR began operations on November 1, 1997, when it took over the 54.45 miles (87.63 km) formerly operated by the Great Western Railway of Colorado under contract. The county operated the rail line on precarious financial footing with frequent derailments and grants needed for maintenance funding.