The Rio Grande Pacific Corp., based in Fort Worth, Texas, has the lease to run trains on the long-dormant lines between Cañon City and Dotsero.
But it will be many years before passenger cars and tankers filled with the freight-mover’s crude oil traverse Tennessee Pass — and not just because costs to fix the line that last saw trains in 1997 will reach into the hundreds of millions of dollars. A billionaire grain and hemp baron on the Eastern Plains is girding to battle Rio Grande Pacific for the right to run trains on the historic Tennessee Pass Line.
Stefan Soloviev, heir to his father’s Manhattan high-rise real estate fortune and owner of more than 350,000 acres of farmland in Colorado, Kansas and New Mexico, has spent the past year pushing the federal Surface Transportation Board and local Colorado communities and agencies to support his bid to ship his grain on the Tennessee Pass line.
But on Dec. 31, Rio Grande Pacific Corp. announced it had secured a lease on the Union Pacific tracks. The Texas rail company is the planned operator of a proposed rail line in Utah that will connect mountainous oil fields to the national rail network, raising concerns that trains of crude could be traversing Tennessee Pass, Browns Canyon and the Royal Gorge.
The Rio Grande Pacific Corp.’s new subsidiary Colorado Midland & Pacific Railway Co. said this week it was launching a listening tour of communities along the 209-mile route to discuss possible passenger and freight service. And Soloviev, who last year urged the federal Surface Transportation Board to force Union Pacific to sell the long-dormant Tennessee Pass Line to his Colorado Pacific Railroad, which serves his sprawling empire of farmland on the plains, announced plans to protest the lease.
The board last year denied Soloviev’s request for a forced sale, but left the door open for him to ask again.
And now Soloviev, whose late father Sheldon Solow’s legacy includes more than 200 legal battles, is promising to fight the Union Pacific lease to Rio Grande Pacific Corp. and he’s asking a host of Colorado leaders and agencies to support him.
“Monopolies have proven time and again in agriculture throughout the history of the United States to hurt no one more than the farmer and growers on the western plains and across the country,” reads a Jan. 2 statement from Soloviev announcing the plan to protest the lease.
Rio Grande Pacific Corp. is a rail freight company that owns four short-line railways that traverse 700 miles in six states. The company serves 140 freight companies, moving commodities in the agricultural, chemical, lumber, mineral and recycling industries. The company operates a 21-mile commuter rail service in Denton and Dallas counties in Texas.
The first step for Tennessee Pass, company spokeswoman Sara Cassidy said, was the lease agreement to operate on the line.
“Now that we have an agreement, we plan to reach out to those communities along the corridor to determine what their economic development and transit plans are,” she said. “We want to listen to communities about what they want and need.”
Cassidy said she did not have a cost assessment for reviving the dormant Tennessee Pass Line but feasibility studies would follow the outreach phase, which will continue for “at least the next few months.”
Rio Grande Pacific Corp. is planning to operate a proposed $1.5 billion railroad connecting oil fields in northeastern Utah’s Uinta Basin with the national rail network. Private equity fund Drexel Hamilton Infrastructures Partners is financing the project, which would deliver 400,000 barrels of Uinta Basin heavy crude oil, which is too thick for a pipeline, to refineries on the Gulf Coast. The project is supported by the State of Utah’s Seven County Infrastructure Coalition and would connect the high-altitude oil fields with Union Pacific tracks.
The 85-mile Uinta Basin Railway is in the final stages of environmental review by the Surface Transportation Board, which is taking public comments on a massive Draft Environmental Impact Statement through Jan. 28.
The proposed Uinta Basin rail line would send four to 10 trains per day onto the national train network, with each train up to 10,000-feet long and carrying 110 oil tanker cars. Add other products, like fracking sand and materials for oil drilling operations, and the average number of trains per day could climb to 11.
Cassidy declined to talk about scenarios where Rio Grande Pacific Corp. would route Uinta Basin crude oil over Tennessee Pass and through Browns Canyon. The only connection between the Uinta Basin Railroad and the Tennessee Pass lease agreement, she said, is that “the same parent company is involved.”
“We are viewing this corridor with a totally independent lens. We do have the connection between the two projects and we are just listening to what communities want right now,” Cassidy said, adding that hauling crude oil through Browns “is not in our current plan.”
Soloviev is not letting the Rio Grande Pacific Corp. deal go down without a fight.
Soloviev has spent more than $100 million on 352,000 acres of wheat and hemp farmland in southern Colorado, Kansas and New Mexico since 2006, and earlier this year he asked the Surface Transportation Board to force Union Pacific to sell the Tennessee Pass line to his Colorado Pacific Railroad for $8.8 million. Union Pacific had already rejected a $10 million offer from Soloviev.
Soloviev argued the line had been dormant too long. In order to reach mills in Utah, his Crossroads Agriculture was sending its grain 250 miles east to connect with a westbound rail line. His wheat was traveling 500 miles “without any net westward progress,” reads the February filing with the Surface Transportation Board.
Soloviev in 2017 won approval from the transportation board to force the sale of the 122-mile Towner line in southeast Colorado. His agricultural company and Colorado Pacific Railroad invested $17 million into rehabilitating the Towner Line and plans to open the railroad soon.
Lobbying for public officials’ support
Union Pacific asked the transportation board to reject Soloviev’s forced sale request for the Tennessee Pass rail line, saying it was negotiating with another buyer. In March, the board denied Soloviev’s request for a forced sale, but left open the opportunity to re-file.
Colorado Pacific Railroad attorney William Osborn has been lobbying for the support of Colorado officials, sending letters in August, September and October asking them to help persuade the Surface Transportation Board to open the Tennessee Pass Line for rail service.
In Osborn’s letter to the Arkansas Headwaters Recreation Area, he said Crossroads Agriculture and Colorado Midland Railroad were “mindful there is some upper Arkansas Valley sentiment against” resuming service on the Tennessee Pass Line. Osborn said the company was ready to offer a 60-mile right-of-way for a recreational trail along the tracks from Leadville to Salida.
In a letter to Colorado Department of Transportation transit and rail director David Krutsinger, Osborn asked the state to tell the Surface Transportation Board it wanted service restored on Tennessee Pass by any provider. He asked the agency to tell the national board that rail service on Tennessee Pass would be “a matter of public convenience and necessity.”
The letter outlines why the state should want rail traffic returned to Tennessee Pass, which includes its critical alternative to the 6.2-mile, state-owned Moffat tunnel, which cannot handle high loads like wind turbine parts, military equipment and industrial machinery. The letter outlined opportunities for eastern Colorado farmers to move grain to new markets on the West Coast. Osborn also noted how Tennessee Pass trains could alleviate truck traffic on Interstate 70. Other benefits described in the letter to CDOT included ferrying water for firefighting, possibly passenger service between Cañon City and Minturn, and regular freight shipments to mountain towns in the winter when travel on I-70 is challenging.
A CDOT spokesman declined to comment, saying the agency is watching the early planning of what will be a lengthy process.
In a September letter to Mark Greksa, the owner of the 12-mile Royal Gorge Route Railroad based in Cañon City, Osborn said any new traffic on the Tennessee Pass Line would not disrupt Greksa’s tourist trains.
“Indeed the primary purpose of this letter is to inquire of your interest in expanding your tourist train operations,” Osborn wrote, asking if Greksa would want to return passenger service to the rails between Cañon City and Minturn, which last ferried passengers in 1964.
Greksa shares his line with Rock & Rail Railroad, a freight company that runs trains at night, when his tourist train is idle. Greksa said he is expanding his tourist train operation with an additional four to five trains a day and Rock & Rail is growing as well. There is “absolutely no window” for additional trains on the line, Greksa said in an interview.
“As for the Royal Gorge Route, at this time, we would not grant permission for them to access this part of the line,” Greksa said. “I’m receiving calls from rafting companies who are concerned about the prospect of rail cars, carrying millions of gallons of oil through the gorge, experiencing a train derailment, and spilling crude into the Arkansas River. Many people are getting nervous, so I am working to calm some nerves.”
In a late-October letter to commissioners in Pueblo, Fremont Chaffee, Lake and Eagle counties, Crossroads Agriculture and Colorado Pacific Railroad said they would “remain vigilant to ensure” the restoration of rail service over Tennessee Pass, even urging prompt rehabilitation of the line should Rio Grande Pacific Corp. land a deal with the Union Pacific. The letter to commissioners included a 1964 schedule of trains traveling between Pueblo and Minturn in a little more than five hours.
Osborn said in his letter to commissioners that the company recognizes there will be local opposition to reviving rail service.
“However, it now appears that the matter will be pursued to an endpoint of service restoration by one company or another,” he wrote. “We hope that whoever company that might be, your communities will see it as an action for the greater good, despite the misgivings of some.”
Osborn, who declined to speak on the record but provided reams of documents and letters from his client, also sent a letter to Vail Resorts CEO Rob Katz, asking for his support in showing the federal transportation board the “public convenience and necessity” of rail service on Tennessee Pass.
Two days after Rio Grande Pacific Corp. announced its lease with Union Pacific, Soloviev’s Colorado Pacific Railroad announced it would file a protest asking the transportation board to reject the Tennessee Pass lease agreement “on the grounds that UP thereby maintains its monopoly stranglehold across the Rocky Mountains in Colorado.”
The weekend news release also said Colorado Pacific is requesting that the federal board reconsider the proposed forced sale and said Rio Grande Pacific’s new name for its Colorado business — Colorado Midland & Pacific — was “deceptively similar to ours in a purposeful effort to confuse the public.”
“This is legally actionable and will not be tolerated,” the release reads.
On Friday, Colorado Pacific Railroad filed two motions with the Surface Transportation Board. One motion asked for access to the confidential lease agreement between Union Pacific and Rio Grande Pacific Corp.’s Colorado Midland & Pacific Railway, arguing the lease agreement could restrict competition and should be closely scrutinized.
A second motion filed Friday asked the Surface Transportation Board to postpone swift approval of the lease plan, with Colorado Pacific Railroad arguing the notice of the lease announced Dec. 31 is filled with “numerous false statements and misrepresentations.” The eastern Colorado railroad shared “deep concern” that the lease with Rio Grande Pacific Corp. would allow Union Pacific to restrict access to Tennessee Pass to only Union Pacific railroad users, and not competitors like BNSF Railway Co.
Chaffee County Commissioner Greg Felt spoke with Rio Grande Pacific Corp.’s Cassidy shortly after the Dec. 31 lease announcement.
“She had very little information and was sort of wide open about the possibilities,” Felt said. “It didn’t really make much sense as a business plan.”
A history of derailments
Where Eagle County might see opportunities in moving people up and down the Eagle River Valley, passenger traffic in the Arkansas River Valley is not a high priority, Felt said. Chaffee County’s two major towns, Salida and Buena Vista, are only 30 minutes apart.
Felt remembers derailments on the line in the 1980s and 1990s when coal cars tumbled into the Arkansas River just below Browns Canyon. Another time a flash flood sent cars into the river near Cotopaxi. Trains also derailed on the steep grade just below Tennessee Pass near Camp Hale, including an accident in 1996 that killed two crew members and spilled sulphuric acid. Derailments played a role in Union Pacific’s decision to mothball the Tennessee Pass line in 1997.
“In the nearly 25 years since rail traffic ceased, our community has changed a lot,” Felt said. “Twenty-five years ago Salida had its back to the river and now the community has embraced the river. We have the largest stretch of Gold Medal waters in the state, the most popular fishery in the state and the most rafted river in the country. So I see a full spectrum of potential impacts with freight traffic. We need to look at the nature of the freight, too. That would be a real issue when you think about public safety and our environment. Will they be hauling grain or oil?”
Colorado Pacific Railroad, in its February filing with the transportation board, estimated it would take $278 million to rehabilitate 209 miles of rail line between Dotsero and Cañon City, which includes replacing all rails and ties. That’s for just freight. Adding passenger traffic would spike that cost. And Rio Grande Pacific Corp. estimates annual revenue will be about $5 million from traffic on the Tennessee Pass Line. At that rate, paying off the cost of rehabilitation will take several decades if not close to a century.
Felt thinks any operator will need lots of freight traffic to pay off those repair costs.
“I don’t really see how this pays. It doesn’t really add up,” he said.
Eagle County this year was hoping to launch a community process to gather input on how the rail line might fit into future transportation plans. That process was delayed by the pandemic, so Eagle County won’t have a broad consensus for Rio Grande Pacific Corp.
Eagle County Commissioner Matt Scherr said even without a lot of public input, any activity on the rail line along the Eagle River from Minturn to Dotsero would be “tremendously impactful.”
“I think the extremes are what we can agree on right now. Like pure freight, that would be all impact and zero benefit,” Scherr said. “We are interested, at least conceptually, in passenger rail. I can’t imagine why anyone would want to see freight with no other benefits.”
UPDATED: This story was updated at 4:00 p.m. on Jan. 8, 2020, after Stefan Soloviev’s Colorado Pacific Railroad filed motions with the Surface Transportation Board.