Feds may take another look at rail merger

Brief by Central Staff

Transportation – March 1998 – Colorado Central Magazine

Feds may take another look at rail merger

As we went to press, it appeared that the federal Surface Transportation Board will take another look at the merger between the Union Pacific and Southern Pacific railroads which it approved in 1996.

The merger meant the abandonment of the old Denver & Rio Grande main line across Tennessee Pass in Central Colorado. No through trains have run since August, although there’s sporadic service to haul concentrates from the Asarco Black Cloud Mine near Leadville.

In its approval, the STB said it would retain oversight for five years to insure that rail customers would get the benefits UP promised, like faster service and $650 million a year in lower costs.

UP’s service has been snarled since last summer, with some shipments taking weeks or months, if they can even be found on its 36,000-mile system. Shippers are now reckoning their losses in the billions on account of delayed deliveries.

In Colorado, coal mines have had to close because they’ve run out of storage space and UP hasn’t been able to bring in trains of empties. This means that the coal customers — many of them electric-generating plants in the Midwest — haven’t had their usual fuel.

So to keep generating, they switch to natural gas. It’s more expensive, so utility rates rise for their customers. It also reduces the supply of natural gas, pushing its price up. This may explain why Salida’s natural-gas rates went up by 50% this winter — perhaps it’s another one of those “benefits” UP promised two years ago.

Most of the rail-related complaints have come from the petrochemical industry in Texas, and that’s where the STB is focusing its attention.

Colorado has also been hurt by the merger and loss of service, but we’re unlikely to get much attention. In the Lone Star State, both the Texas Railroad Commission and Gov. George W. Bush have been steadfast and vocal in opposition.

But in Colorado, our governor rolls over for his billionaire friend Phil Anschutz, who made a bundle selling his controlling interest in the SP to the UP. And the state’s executive branch seems more than eager to convert the railroad right-of-way into a trail, thereby forcing Central Colorado into an economy based solely on tourism and recreation.

So there’s no one to speak for Colorado before the STB in support of undoing the merger. Our state senator, Ken Chlouber, and representative, Carl Miller, have tried before to keep the trains running. Will one of them rise to this occasion and take Colorado’s case to the STB? It’s a sure bet that our governor won’t.