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THREE ARTICLES ON NEWS OF MAJOR COLORADO ABANDONMENTS IN 1997

The March 1997 edition of Trains magazine has an excellent 12-page article on the history and current operations of the Tennessee Pass line.

Future of Colorado Railroad Lines Discussed with Union Pacific

Th Union Pacific-Southern Pacific merger created two major abandonments proposed for trails and/or short line rail service: Tennessee Pass and NA-Towner lines.

By Stuart H. Macdonald

Map of Colorado

The Steering Committee for the Tennessee Pass rail line met October 2, 1997 to review the final draft of the Feasibility Study. Bob Opal and Jim Gatlin of the Union Pacific Railroad discussed the railroad's plans to consummate the UP-SP merger and what impacts it will have for the Tennessee Pass corridor. Questions included:

What is the current status of the Tennessee Pass rail line? Union Pacific was given permission to discontinue service on the 178 miles of track from Cañon City to Sage. This means UP is free to stop service, but not remove the track. Other commitments are to (1) continue to operate trains for six months, and (2) keep tracks in place for one year following the merger. The disposal of the 60 miles from Malta to Sage is subject to ongoing negotiations for rail operation.

What does UP have to do to gain permission to abandon the line? UP must reroute the overhead traffic (trains that are simply passing through Colorado) and show they can successfully operate without the Tennessee Pass line. The railroad will not have to file for abandonment, but will have to make a filing with the Surface Transportation Board (STB) showing that the rerouting is working.

How soon will UP close down the Tennessee Pass and NA-Towner lines? There will probably be no change in railroad operations through the winter. The process has just started on the plan to coordinate operations now that the two railroads are merged. Some overhead traffic would be rerouted starting next spring or summer. Completion of rerouting may be done as soon as the end of 1997, or as late as the end of 1998.

What improvements need to be made to the railroad before the rail lines can be abandoned? Traffic rerouting depends on using other lines in other states, not just the Moffat Tunnel line to Denver. There are no plans to alter the Moffat Tunnel or any other tunnels. The intermodal traffic will be routed through Cheyenne as much as possible. The Moffat Tunnel is not a fast route and would not be used as a routine intermodal or "double stack" route.

The $1.3 billion UP plans to spend on improvements does include a wide range of improvements, including Denver yard connections and lengthened sidings for the "KP" line from Denver to Kansas.

Timetable Projected for Actions On Tennessee Pass Rail Line

Speculation continues on what will happen to the 178-mile Tennessee Pass railroad line and the 122-mile Towner to NA Junction line. First, will a new rail operator emerge to save the tracks? The Colorado Office of Business Development is currently seeking viable proposals for these lines. It is issuing a "pre-bid" letter to potential rail operators to gauge their level of interest. Then a Request for Proposal will be sent out. Findings from this search will be announced in July.

Meanwhile, the Union Pacific is spending over a billion dollars in improvements throughout its system. The line from Denver to Topeka (the "KP line") is slated for $86 million of new passing sidings and track work. This line connects with the Moffat Tunnel route and is crucial to moving traffic off the Tennessee Pass line. The schedule for this change was addressed in a recent statement by Union Pacific Railroad:

"Our current planning is to begin to remove the overhead traffic on the Tennessee Pass and the Towner to NA Junction line during the second quarter of 1997. The rerouting process should continue through the summer as capacity improvements are made on the KP line. Our goal is to have the overhead traffic completely rerouted by the end of September. We expect to continue local service through late September or early October."

154 Miles of Colorado Rail Corridor Slated for Trail, 24 miles for Tourist Train

From Office of Business Development

Map of Colorado

The State of Colorado named the Marcus Corporation of Denver as the designated company to try to preserve rail service on a portion of the Colorado rail corridors to be abandoned by the Union Pacific Railroad.

John Dill, State Director of Economic Development, made the announcement on behalf of the Governor and the State at a news conference September 25. The Marcus Corporation was one of only five bids received to continue service along all or a part of the Tennessee Pass and Towner-NA Junction lines. Both lines are scheduled to be abandoned as a result of the 1996 merger of the Southern Pacific and Union Pacific railroads.

The State used a panel of outside experts convened by the Western Governors' Association (WGA), which included a short line rail expert, a rail line sale due diligence consultant, and a financial expert to help analyze the financial and operational strengths and weaknesses of the five bids. The panel members were Lynn T. Cecil, retired president of Kyle Railways, Inc.; Charles Banks, R. L. Banks & Associates, Inc.; and Lee White, George K. Baum & Company.

The designee is a consortium of three companies:Marcus Corporation, INAP Inc./Rock & Rail Inc. of Denver, and the Georgetown Loop Railway, operator of the tourist railroad in Georgetown, Colorado. The consortium proposes to run a combination of freight and tourism service on a 24-mile segment of the Tennessee Pass line from Cañon City to Texas Creek through the Royal Gorge. the consortium's financial and operating plan was judged to be the strongest of the five bids by the WGA panel.

Bids from Tulare Valley Railroad Co. of Salt Lake City, and Mile-High Transportation Co. of Denver were received for operation of the entire 300 miles of railroad proposed for abandonment. Both bids were considered non-responsive to the State's request for proposals, and were disqualified from further consideration. The outside panel had serious concerns with the operational and financial aspects of the Tulare and Mile High bids.

"The State has reached an important milestone by naming this designee," said Governor Roy Romer. "From the beginning, we knew it was going to be difficult to preserve any service along these two lines because of a lack of customers, but I believe the process we've had under way for the past eight months has been fair, and has resulted in identifying the most realistic plan to continue rail service in these areas."

"The Southern Pacific Railroad primarily used these two corridors for moving out-of-state trains through the State of Colorado, not for much local traffic," said Dill. "This made it all the more difficult to preserve local service along both lines when the Union Pacific no longer wanted to run trains on these lines."

Dill cited statistics showing that between 1994 and 1996, the Tennessee Pass line generated local traffic averaging only 2.8 cars per mile per year over the entire 173-mile length. During the same period, the Towner-NA Junction line generated an average of only 1.7 cars per mile per year of local traffic over its entire 122-mile length. Railroads typically require at least 30 cars per mile per year of local rail traffic to make a route profitable, Dill said. This lack of customers was the primary reason, Dill said, that only five bids were received from the 180 railroad companies the state solicited in its national search for purchasers.

Marcus Corporation now moves forward to negotiate directly with the Union Pacific Railroad. The State, which concluded its process with today's announcement, will not participate any further in the negotiations. However, Dill said, the State will monitor their progress.

Disposition of the rail lines not subject to the Marcus Corporation bid will move forward on a separate basis. In the case of the Towner-NA Junction line, the Union Pacific Railroad has received clearance from the federal Surface Transportation Board to abandon the track. The UP has also agreed to donate a portion of the Tennessee Pass line to the State for corridor preservation/trails. Still other sections of the Tennessee Pass line may be purchased by the State for trails.

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