Feds refuse to force Tennessee Pass rail line sale

Tennessee Pass line still coveted by a couple suitors

The Surface Transportation Board, the federal agency that regulates the nation's railroads, refused to force Union Pacific to sell its Tennessee Pass line to KCVN, a Kansas grain producer. However, the ruling left the door open for KCVN to ask again.
Chris Dillmann |

A federal agency will not force Union Pacific to sell a railroad line that rolls through the valley.

A Kansas-based grain producer, KCVN, wants to buy Union Pacific’s Tennessee Pass railroad line to create a more direct route to West Coast markets and ports. Union Pacific said no, so KCVN asked the Surface Transportation Board to force Union Pacific to sell. The STB refused.

However, the STB, the federal agency that oversees America’s railways, left the door open just a crack, dismissing KCVN’s request “without prejudice,” meaning KCVN could come up with additional information and make its request again.

Competing offers

KCVN’s $8.8 million offer for the Tennessee Pass line is competing with another offer, reportedly from Rio Grande Pacific, to make it part of a system hauling crude oil from Utah’s Uintah Basin to Gulf Coast refineries. That could mean up to 400,000 barrels a day in as many as 10 trains rolling through the valley.

While Union Pacific’s Kristen South and Raquel Espinoza confirmed that UP is negotiating with “other parties,” both have declined to say whom.

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KCVN demanded that the Surface Transportation Board reveal who Union Pacific’s “other parties” are. The Surface Transportation Board did that, but by accident. A filing appeared briefly on the Surface Transportation Board’s website, but was quickly removed, the Trains News Wire reported.

KCVN offered UP $10 million for the 229-mile Tennessee Pass line on November 14, 2019. Union Pacific declined the offer on Dec. 30, 2019.

When KCVN requested the Surface Transportation Board to force Union Pacific to sell, KCVN’s offer dropped to $8.8 million.

It would cost $278 million to rehabilitate it, KCVN’s filing says. The Tennessee Pass line runs from Pueblo, over Tennessee Pass and down through the Vail Valley to Dotsero. Union Pacific has not used the Tennessee Pass line since the mid-1990s when UP merged with Southern Pacific.

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