Colorado Pacific says it would offer passenger service as part of new bid for Tennessee Pass line (updated and corrected)

Short line's earlier effort was dismissed by Surface Transportation Board, but letters show effort to line up support for second bid
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Colorado Pacific says it will operate passenger service over Tennessee Pass if it gains control of the line from Union Pacific, and in a letter seeking support from local government officials, included this 1964 Royal Gorge timetable to show what service might look like.

Colorado Pacific Railroad is making another bid to obtain the former Denver & Rio Grande Western Tennessee Pass line through the Colorado Rockies from Union Pacific, and this time says it will operate passenger service as one of several moves to gain support for its effort.

In a letter to the chairs of five boards of county commissioners along the route, the law firm representing Colorado Pacific says the railroad would provide daily passenger service between Pueblo and Minturn, Colo., citing a 1964 Denver & Rio Grande timetable to show what that service might look like. The passenger service would be provided as part of the effort to “meet the statutory test for public convenience and necessity,” which the Surface Transportation board said was lacking in an earlier bid to purchase the line [see “Regulators toss out effort to force UP to sell Tennessee Pass,” Trains News Wire, March 18, 2020].

Another letter, to the head of the Colorado Department of Transportation’s Division of Transit & Rail, requests support for a possible STB filing. That letter says the latest effort has reduced the planned scope of the intended purchase. The prior bid sought to obtain the entire Tennessee Pass line between Pueblo and Dotsero, Colo. The new effort seeks only to purchase the inactive 159.5-mile portion between Parkdale and Sage, Colo., while seeking access at either end through Union Pacific or BNSF Railway.

That letter also indicates Colorado Pacific approached UP in a Sept. 11 letter to renew its offer to buy. The Colorado Pacific letter says Union Pacific had not responded, but Union Pacific said this morning that it responded in October, “reiterating that we are in active negotiations with Rio Grande Pacific.” Rio Grande Pacific’s interest was first revealed in a March filing with the Surface Transportation Board. That company operates short line railroads, is the contract operator of Denton’s A-Train commuter rail service, and is involved in the effort to build the Uinta Basin Railway to transport crude oil from a remote part of Utah.

Union Pacific’s statement adds that the railroad “continues to negotiate with Rio Grande Pacific on a deal that returns service to the line. We are committed to seeing these negotiations through before considering any other options. If negotiations aren't successful, we will reach out to Colorado Pacific.”

Colorado Pacific’s letter says it hopes UP is willing to consider a voluntary sale or lease. “However, if it refuses to engage in such discussions, or to immediately sell or lease the line to some other company which will promptly place it back in service without restrictions on competition” [emphasis in the original], Colorado Pacific says it will go back to the STB with a revised feeder line application to force the sale.

Finally, a third letter, to the manager of the state’s Arkansas Headwaters Recreation area, says Colorado Pacific “is mindful that there is some upper Arkansas Valley against any resumption of rail service” and offers a permanent easement along the rail right-of-way for a trail, should the company succeed in acquiring the line. “Class I railroads like the UP will generally not support this approach,” the letter says, “but smaller railroads can be more accommodating.”

Colorado Pacific operates the Towner Line, a 121.9-route in Eastern Colorado which it obtained through a feeder line application to the STB, and says it has spent $17 million to date to rehabilitate the line and restore service, primarily for agricultural products.

The railroad and its parent company, KVCN LLC, first expressed interest in purchasing the Tennessee Pass line in late 2019, prompting Union Pacific to say it had received offers for the route and was “open to considering a deal that is mutually beneficial” [See “UP considering sale of Tennessee Pass route,” News Wire, Nov. 19, 2019]. After UP turned down the offer, KVCN and Colorado Pacific asked the Surface Transportation Board to force the sale under a feeder line application [see “Real estate moguls seek to pry Tennessee Pass line away from Union Pacific,” News Wire, Feb. 18, 2020]. That bid was turned down by the STB because the application was incomplete, but left open the door for another request.

— Updated at 9:15 a.m. with Union Pacific comment, which corrects that UP has responded to Colorado Pacific's most recent letter.

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