The 416 fire, which started on June 1, 2018, about 13 miles north of Durango, had burned more than 54,000 acres by the time it was declared controlled on July 27, 2018. U.S. Forest Service officials led a hike through the burn zone on Oct. 31, 2018, that gave participants a view of how the forest has begun to regenerate itself in some places. (Photo provided by Joe Lewandowski, Colorado Parks and Wildlife)

By Aedan Hannon, The Durango Herald

The Durango & Silverton Narrow Gauge Railroad and its parent company, American Heritage Railways, will pay $20 million to settle a federal lawsuit stemming from the 416 fire.

Separately, lawyers for 40 La Plata and San Juan county businesses and landowners that sued the tourist railway to recoup losses blamed on the fire, sparked by a cinder from a coal-fired locomotive in 2018, said they have reached a deal, though the details were not made public.

“All I can say regarding our clients’ settlement is the matter is settled,” said Anthony Savastano of Durango law firm Duthie Savastano and Brungard, who represents many of those who sued the train.

The federal lawsuit, filed in May 2020, accused the railroad of negligence that led to the 416 fire and sought compensation for smoke, mudslides and flooding, but also for indirect damages, including lost business.

John Harper, chief operating officer of American Heritage Railways, confirmed the tentative agreement. “There’s only a one or two line items remaining until more information on that can be released. I’m expecting within the next seven to 14 days it should be public knowledge.”

The details of the federal settlement were released Monday by the U.S. Attorney’s office in Denver. The railroad has agreed to pay $15 million up front, an additional $5 million plus interest over 10 years, and promised to stop using coal to power locomotives when fire danger is high.

“The Durango & Silverton Railroad represents an important historic and cultural icon in southwest Colorado,” U.S. Attorney for the District of Colorado Cole Finegan said in a news release. “We intend for this settlement to enable the railroad to continue to operate, but in a manner that will avoid causing future catastrophic wildfires. In addition, this agreement ensures fair compensation for the damages caused by the 416 fire.”

The government had been seeking $25 million to cover firefighting and rehabilitation costs related to the 416 fire, which burned for about 60 days starting June 1, 2018, largely in the San Juan National Forest north of Durango. About 54,000 acres burned. Heavy rains that followed triggered flooding and mudslides in the burn zone that damaged homes and businesses.

More than a year after the fire, U.S. Forest Service investigators concluded that a cinder from the smokestack of one of D&SNG’s coal-burning locomotives ignited the blaze. The U.S. Attorney’s office said private fire investigators reached the same conclusion.

Monday’s agreement was not an admission of D&SNG’s liability, according to a release from the U.S. Attorney’s Office.

Five of the railroad’s eight steam locomotives have already been converted to burn recycled oil, the company said in a news release. It also purchased four new diesel trains that are currently in use. The railroad said it will operate only the oil-burning and diesel locomotives to transport people between Durango and Silverton during the coming summer tourist season.

Other terms of the agreement require the D&SNG to:

  • Comply with an Industrial Fire Restrictions Plan that places limits on the railroad’s operations when fire risk is elevated and prohibits operations when fire risk is extreme.
  • Prepare and submit an Operating and Fire Prevention Plan to the U.S. Forest Service annually.
  • Retain an independent consultant who will inspect, report on, make recommendations and audit D&SNG’s fire mitigation and prevention measures annually.
  • Hire a full-time fire management officer who will provide monthly certification of compliance with the above plans and reports.
  • Maintain a minimum of $3 million in wildfire insurance coverage and conduct an annual review to determine the economic feasibility of additional insurance coverage.
  • Create a self-insured wildfire fund which D&SNG will contribute $100,000 per year and can be used to pay for costs arising from wildfires caused by the railroad.

Matt Cunningham, special projects and operations manager for the railroad, said the deal will help to protect forests in the face of “warming trends in the Southwest.”

“While this is consistent with what the railroad has done through its policies, procedures, equipment and training since D&SNGRR purchased the railroad in the 1980s, opening new lines of communication and collaboration are ultimately going to benefit all parties involved as well as the communities of Durango and Silverton,” he said.