UP will formally oppose KCVN LLC and Colorado Pacific Railroad LLC’s plan to acquire the 228-mile former Denver & Rio Grande Western line in Colorado, UP wrote in a short letter to the Surface Transportation Board on Monday.
In a feeder line application filed with federal regulators last month, KCVN and Colorado Pacific said they would buy the Tennessee Pass route for its liquidation value of $8.8 million, down from a $10 million offer they made to UP in November.
UP in December declined Colorado Pacific’s offer and said it was in active discussions with another party who wants to restore service on the line.
“The Tennessee Pass Line is simply not an appropriate target for a feeder line application,” UP’s general attorney, Jeremy Berman, wrote to the STB. “The feeder line process was created to preserve rail service to existing shippers. It is meant to prevent railroads from allowing active rail lines to fall into such a state of disrepair that shippers can no longer ship via rail.”
KCVN and Colorado Pacific’s plan does not follow “either the letter or the spirit of the feeder line application procedure,” Berman wrote.
UP says it is unaware of shipper complaints about service on active portions of the route or of demands for service on mileage that has been mothballed since 1997.
Nonetheless, UP has been in “promising discussions” with another interested potential operator of the line, Berman told the STB. The railroad will provide additional details about the negotiations, and the name of the interested party, in a formal filing subject to a protective order.
The Tennessee Pass line is not needed as a through route for Rocky Mountain traffic, UP says. The railroad’s trio of main lines — the Central Corridor through Moffat Tunnel, the Overland Route, and the Sunset Route — are all superior, UP notes, citing the burdensome 3% grade over Tennessee Pass.
KCVN and Colorado Pacific in 2018 successfully used a feeder line application to gain control of the 121.9-mile Towner Line in Eastern Colorado. Last year Colorado Pacific spent $3.5 million to restore the line to 25-mph operation and next month plans to resume regular service on the line.
A sale of the Tennessee Pass line to Colorado Pacific would create a nearly 400-mile route extending from Towner, Colo., to Dotsero, Colo., that would provide grain and mining shippers with a shortcut to Utah and the West Coast, KCVN says in its filing.
Colorado Pacific would spend $278 million to bring the Tennessee Pass route back to Federal Railroad Administration Class 2 track standards that would permit 25 mph operation.
KCVN is controlled by New York real estate developer Sheldon Solow and his son, Stefan Soloviev, who reverted to the traditional spelling of the family’s name.
Soloviev, who controls Colorado Pacific, has extensive land holdings in the West totaling more than 350,000 acres, including cropland in Colorado, Kansas, and New Mexico. His companies, which operate under the name Crossroads Agriculture, own grain elevators in eastern Colorado and western Kansas.
