WASHINGTON – The Surface Transportation Board will review several issues surrounding Colorado, Midland & Pacific’s proposed lease of Union Pacific’s long-dormant route over Tennessee Pass.
The board’s decision, released today, indefinitely postpones what is normally a 30-day clock that covers deals between short lines and Class I railroads.
Under U.S. law, railroad transactions fall into four categories: major, significant, minor, and exempt. Short line transactions and leases of lines from Class I railroads generally fall into the category that is exempt from board review. And that means transactions like CM&P’s lease of the 163.1-mile Tennessee Pass route typically would become effective 30 days after a filing for an exemption is made with the STB.
CM&P’s exemption was set to take effect on Jan. 30.
But federal regulators hit the pause button, citing another short line’s call for the board to reject the lease proposal as well as opposition from local residents and environmental groups. The board’s decision notes that its streamlined exemption procedures “are reserved for transactions involving routine, uncomplicated, and non-controversial matters.”
The board said it would need time to fully consider arguments presented by Colorado Pacific Railroad and its parent company, KCVN; responses from CM&P and its parent, short line holding company Rio Grande Pacific; a response from Union Pacific; and the various environmental and safety concerns raised by residents and environmental groups.
Colorado Pacific — which attempted to force a sale of the Tennessee Pass line before Union Pacific reached a lease agreement with Rio Grande Pacific — claims the Colorado, Midland & Pacific notice of exemption, which would allow it to operate the route, is not appropriate because the proposed lease “is controversial [and] … contains a provision that would restrict competition and rail traffic.”
In a second filing, Colorado Pacific and KCVN requested access to the confidential lease agreement between Union Pacific and Colorado, Midland & Pacific “to ascertain impacts of the interchange commitment contained therein and any other restrictive provisions … on the business of Colorado Pacific and KCVN.”
The board’s decision today defers consideration of Colorado Pacific’s request for access to the lease agreement.
CM&P and UP have both opposed granting Colorado Pacific access to the confidential lease documents. Both companies have told the STB that there were no grounds to reject or delay the transaction. CM&P has told the board that its “primary objective in leasing the line is to provide passenger operations.”
Colorado Pacific and KCVN are affiliated with a grain growing firm that owns the 121.9-mile Towner Line in eastern Colorado and seeks a competitive outlet for grain shipments to the West Coast.
