Received this "quote" in an email yesterday: Feds asked to 'direct' Union Pacific to sell Tennessee Pass line. [KCVN, a Kansas and Colorado agriculture company is trying to buy the Tennessee Pass railroad line from Union Pacific, which says it's in discussions with other entities. KCVN is asking the federal Surface Transportation Board to "direct" the sale. Chris Dillmann | cdillmann@vaildaily.com] After Union Pacific declined a Kansas and Colorado agriculture company’s $10 million cash offer for the railroad line that runs through the Vail Valley, the company is asking a federal agency to “direct” a sale. Last Friday, KVCN, LLC and its subsidiary Colorado Pacific Railroad, asked the federal Surface Transportation Board to direct Union Pacific to sell the 229-mile Tennessee Pass line. The line runs from Pueblo, over Tennessee Pass and through the Vail Valley, to Dotsero. KCVN already bought the 122-mile Towner Line that runs through Colorado’s Eastern Plains, and, so far, spent $3.5 million to make it ready for freight service, expected to begin in April. Adding the Tennessee Pass line would reopen around 360 miles of railroad from Kansas to Dotsero, and “provide a substantial and significant competitive alternative to BNSF and UP to many freight rail shippers in Colorado but also throughout the Western United States,” KCVN says in its Surface Transportation Board filing. KCVN made its $10 million offer Nov. 14, 2019. Union Pacific declined it on Dec. 30, 2019. Union Pacific has not used the Tennessee Pass line since the mid-1990s since it merged with Southern Pacific. UP non-plussed ... Kristen South, senior director of Union Pacific’s corporate communications and media relations, said Union Pacific is aware of KCVN’s complaint. “However, we are in active discussions with another party to potentially restore service to the line, and we plan to continue those discussions,” South said in an email. In its Friday Surface Transportation Board filing, KCVN demanded that the Surface Transportation Board reveal who Union Pacific’s “other parties” are. Who are these guys? The entire Tennessee Pass line is worth $8.8 million. However, it will cost $278 million to rehabilitate it, KCVN’s filing says. The potential buyers appear to have the money. KCVN is owned and managed by Stefan Soloviev and his father Sheldon Solow. “Mr. Solow is one of the 400 wealthiest Americans as determined by Forbes Magazine, which lists his net worth at $4.6 billion. Mr. Soloviev is listed as one of the largest American landowners on the Land Report Magazine Top 100 list,” KCVN’s filing says. KCVN started buying land in Colorado in 2006, and now owns 81,000 acres in Colorado’s Cheyenne, Kiowa and Powers counties. The company also owns 18,214 acres in Kansas and 252,450 acres in New Mexico — and it is under contract to acquire more. In 2019, KCVN harvested 1.3 million bushels of dryland wheat and experimented with hemp cultivation. In 2020 it will be among Colorado’s largest hemp growers, cultivating the crop for fiber and CBD oil. KCVN also runs a cow/calf operation with around 2,500 mother cows, and leases 120,000 acres to renewable energy companies, the company said in its Surface Transportation Board filing. Passenger service on the Tennessee Pass line is not without precedent, KCVN says. In July 1998 the Royal Gorge Express acquired 12 miles of the discontinued Tennessee Pass line between Parkdale and Canon City for excursion train operations. However, a 2017 report from the Colorado Department of Transportation says the Tennessee Pass line has the potential to carry both passengers and freight. That report says that if Union Pacific continues refusing to reactivate the Tennessee Pass line, Colorado should consider purchasing it for freight and/or passenger service. While the Tennessee Pass line has been silent for 25 years, Colorado’s population has grown from 3.8 million to 5.8 million people. “A territory this dynamic and growing should not suffer itself to only one railway across the mountains which divide it,” KCVN said in its filing. For now, though, KCVN says the plan is to move grain to the West Coast. With improvements in plant genetics and fertilizer, eastern Colorado is producing so much wheat that storage capacity is overwhelmed, the KCVN filing says. The company wants to move the wheat to mills in Salt Lake city and Los Angeles. but to do that, growers have to detour their shipments through a 500-mile loop, without any westward progress. Restoring and reopening Tennessee Pass would expand grain markets for Colorado farmers. An not just farmers, KCVN claims that other users would include Martin Mariette Materials, the Climax molybdenum mine, and the American Gypsum wallboard plant and mine in Gypsum. Construction on the Tennessee Pass line started in 1880, running near Leadville and Red Cliff to capitalize on the mining boom. The line has been out of service since the mid-1990's when Union Pacific took over the Rio Grande and Southern Pacific. Union Pacific already had a similar route and the Tennessee Pass route fell dormant.
This has had a lot of buzz on the D&RGW Facebook groups I'm part of. There's definitely potential to see service again, but UP is being a stubborn curmudgeon in the process. We'll see what the STB does, whether they make UP tip their hand or not. The facts are the route is in complete disrepair for the last 2 decades, and in that time, vandals have destroyed and ransacked much of the signal infrastructure. Any operation would likely be with track warrant control (TWC). The $278M rehab cost is said to only meet standards for 25 MPH track. TWC is good for up to 49 MPH, which the eastern slope of TP can be capable of in part. Operating hundreds of miles of track as 25 MPH is pretty inefficient when faster is possible, but the extra cost to bring track up to 49 MPH standards would also have to be factored in. Enormous rocks have pummeled the ROW in some remote reaches of Eagle River Canyon, as well as the Minturn area and water/ice buildup may have damaged the summit tunnel. Regardless of what happens, it's still among the toughest mainline ruling grades in the world, and was idled because of its expense to operate. It's a hazardous place to operate due to weather, rockslides, and the grade itself. While the potential buyer has more money than he knows what to do with, it's still a risk to buy, rehabilitate, operate and maintain the Royal Gorge Route/Tennessee Pass. I'm watching this with great interest, but as much as I want to be optimistic, UP is still involved, and I'll turn blue if I hold my breath for too long!
I don't think I've ever read of such a thing, where an investor has advocated that the STB force a sale of line. If their efforts are successful, it sets a precedent that would incent railroads to tear out unused lines to preserve market control rather than leaving them intact. Some railroads have responsibly retained disused lines with an eye to the future and an action here favoring the investment group could have unfavorable consequences reaching far beyond this line.
Is it money for UP? Is it their fearing some emerging competition in that region? Is it both? Or something else?
If the sale does go thru the line purchase stops at Dotsero, so something will have to be worked out on haulage west from there, or east of there as there is no way to get crews to the switch at Dotsero. Glenwood Spgs or even Wolcott would work better for interchange point, or maybe even Minturn. And it is new business so I would guess BNSF has a chance at getting the haulage to SLC. Yea it is interesting.
Yeah, my brother and I are the other party that UP is negotiating with. We don't want no stinken freight trains going over it to compete with the UP and plan to have tourist trains and commuter rail to service Leadville, Pando, Redcliff, Minturn, Avon and Eagle.
Same reason BN jumped on the ex-Milwaukee Road line over Snoqualmie-UP had an interest in it and BN didn't want the competition.
Whoever completes the deal, one can only hope trains will be soon running again on this legendary line... And in spite of what r_i_straw says, I would definitly appreciate fraight traffic. Only that would make me grab a flight from Europe to Denver and head towards the Rockies. Dom
