Falcon48 I did some quick research on the STB website. You'll find quite a bit of information on the post UP abandonment history of the Towner line in an STB decision served November 13, 2012 in Finance Docket 35664. It's available at the following web address: http://www.stb.dot.gov/Decisions/readingroom.nsf/UNID/95302871ABB9CEFB85257AB500751DC4/$file/42646.pdf Based on this decision, my recollection of what happened was essentially correct. The state acquired the line from UP in 1998. CK&P acquired the right to operate the line from the state. In 2004, the state sold the line to V&S (the A&K affiliate), which then took over operation of the line from CK&P. In other words, A&K didn't come into the picture until 2004.
http://www.stb.dot.gov/Decisions/readingroom.nsf/UNID/95302871ABB9CEFB85257AB500751DC4/$file/42646.pdf
Based on this decision, my recollection of what happened was essentially correct. The state acquired the line from UP in 1998. CK&P acquired the right to operate the line from the state. In 2004, the state sold the line to V&S (the A&K affiliate), which then took over operation of the line from CK&P. In other words, A&K didn't come into the picture until 2004.
"Digest:1 This decision addresses unusual circumstances in which V and S Railway, LLC (V&S) bought a line of railroad, obtained lease and operating authority, but failed to obtain acquisition authority. V&S now seeks to abandon a portion of the line that has been out of service for over two years. In this decision, the Board grants acquisition authority, but denies the request that the authorization be made retroactive to the time of purchase. To facilitate the abandonment process, however, the Board waives the requirement that the carrier have Board-authorized ownership of the line for at least two years in order to use the expedited procedures for terminating operations on out-of-service lines."
Footnote 7 describes a similar situation, but where the petitions would have been in reverse order.
Falcon48, thanks again for that decription and citation.
- Paul North.
In response to Dave Klepper's post, there is an excellent discussion of SP's traffic, competitive position and economics on its "Central Corridor" route (including the Towner Line and the Tennessee Pass line) in UP's 5th Oversight filing in the UP/SP merger. See the verified statement of John Gray, SP's former Vice President, Network & Corporate Design, in STB Finance Docket 32760 (Sub-N0. 21), UP/SP 284, July 2, 2001. Unfortunately, this statement is no longer available on the STB website. I have an electronic copy, but I don't have the computer skills to attach it to a post (if that's even possible). The main UP-SP merger application (if you can get a copy of it) should also have carload information on the various SP system line segments which would lose traffic as a result of the merger, showing pre merger traffic and post merger projected traffic. It would be in the Operating Plan. I don't have a copy of this document.
With respect to the Ogden gateway solicitation condition, I believe there was such a condition dating back to the SP-Central Pacific merger. There were also "solicitation" conditions in many other mergers before the mid 1980's. The ICC vacated almost all of these conditions from the mid 1980's on, finding them to be generally anticompetitive. I'm not sure when the Ogden gateway conditions were vacated, but I'm pretty sure they were. I believe there was also litigation involving claims that SP was obligated to preferentially route traffic via Ogden by the 1860's vintage Pacific Railroad Act, which SP won.
There was to be a "new" revised filing today (#239637 re-start the procedings?) on the STB website, but it was never totally posted. If the title bears any resemblence to the document, then the V&S people still don't understand the Otero County issue. Hopefully by now they also understand that 95+ % of the line is federal grant right of way and they won't try to play dumb on that issue either. (They originally claimed none of it was, hoping nobody was watching.)
http://www.stb.dot.gov/FILINGS/all.nsf/WEBUNID/5A1B210DAF1B401A85257F0D00750B81?OpenDocument
The latest newsletter from the Rocky Mountain Railroad Club has a picture of TTX double stack well cars that are being stored on the Towner line by BNSF. The caption mentions that V&S is still pursuing abandonment of the line.
mudchicken
REPLY
STB often posts the title of a filing when it receives it and then posts the entire document a day or so later. The entire document is now on the STB website and can be viewed there.
The "Otero County" issue relates to a requirement in STB's current abandonment rules that a railroad list in its abadonment filing counties and zip codes traversed by a line proposed for abandonment. V&S apparently missed Otero County and its associated zip code in its earlier filing. A minor point.
Of more interest is that this filing changes the relief V&S is seeking from an abandonment to a discontinuance (i.e., a termination of any obligation to provide service, but no a full abandonment). The reason given is that V&S now has a "singificant car storage opportunity". Presumably this refers to the TTX cars mentioned in another post.
More than a minor point if you read the preceding filings. The "rubber-stamp" abandonment of the line that A&K old boys club expected blew up in their faces. By holding this up, A&K's inventory of available track material took a hit as did their usual scorched earth business plan which ignored the public well being. (They had the rail sold and lined up for delivery twice until things were questioned.)
Colorado now has time to take issue with some of A&K's past failings in Colorado, including PUC obligations on the Towner line that it has failed to live up to, plus two other abandonment failings in CO by A&K that have left a bad taste with other county fathers. The push-back is coming.
"Of more interest is that this filing changes the relief V&S is seeking from an abandonment to a discontinuance (i.e., a termination of any obligation to provide service, but no a full abandonment). The reason given is that V&S now has a "significant car storage opportunity". "Expect that to be challenged by KVCN and others now that the 11 year SE Colorado drought is finally over and there were two OFA's in the wings that think the line can be made viable. This may get even more interesting when regulating agencies deal with rationalized plant by A&K that may be needed again and was at one point (still?) under contractual agreement or governed by state statute. A&K is trying a tactic that can cover their past blunders and make it unattractive to a new buyer/ easier to force into abandonment. The chess game rolls on.
That "significant car storage issue" extends to tank cars now without a purpose and idled coal hopper sets that are all over the place out here.
mudchicken More than a minor point if you read the preceding filings. The "rubber-stamp" abandonment of the line that A&K old boys club expected blew up in their faces. By holding this up, A&K's inventory of available track material took a hit as did their usual scorched earth business plan which ignored the public well being. (They had the rail sold and lined up for delivery twice until things were questioned.) Colorado now has time to take issue with some of A&K's past failings in Colorado, including PUC obligations on the Towner line that it has failed to live up to, plus two other abandonment failings in CO by A&K that have left a bad taste with other county fathers. The push-back is coming. "Of more interest is that this filing changes the relief V&S is seeking from an abandonment to a discontinuance (i.e., a termination of any obligation to provide service, but no a full abandonment). The reason given is that V&S now has a "significant car storage opportunity". "Expect that to be challenged by KVCN and others now that the 11 year SE Colorado drought is finally over and there were two OFA's in the wings that think the line can be made viable. This may get even more interesting when regulating agencies deal with rationalized plant by A&K that may be needed again and was at one point (still?) under contractual agreement or governed by state statute. A&K is trying a tactic that can cover their past blunders and make it unattractive to a new buyer/ easier to force into abandonment. The chess game rolls on. That "significant car storage issue" extends to tank cars now without a purpose and idled coal hopper sets that are all over the place out here.
If anyone wants to see what's involved in a "feeder line" sale, see STB's decision approving and setting terms for a "feeder line" sale involving the Coos Bay line in Oregon. It's availabe at the folowing site:
http://www.stb.dot.gov/Decisions/readingroom.nsf/WEBUNID/66E5F5CFC724A5E5852574F3006A8B79?OpenDocument
I've been involved in a lot of railroad abandonments and OFA's. A&K's reputation aside, the track record of OFA purchasers trying to make a go of lines like this one, which have lost all or most of their traffic (for whatever reason) is very poor, to say the least. Even at the time of the UP abandonment application (1995), UP's projected originated/terminated traffic on the line was only 238 cars a year, which was higher than either 1993 or 1994 levels (164 and 142 cars, respectively). 238 cars represents a volume of less than 2 cars per mile per year. That's absolutely dismal and way below the amount of traffic needed to support a 122 mile line that's not used for overhead traffic (as a comparison, the old ICC used 34 cars per mile per year as a "rule of thumb" measure of viability before it adopted a cost based system. I understand the Short Line Association currently uses an even higher figure). The problem with this line wasn't droughts or the lack of grain in its service territory. It was that the grain produced in the territory moved to big unit train loaders on other lines in the area (for example, Cheyenne Wells on UP's KP line). In fact, even the on-line elevators shipped much of their grain by truck either directly to market or to to the unit train loaders. It's doubtful that anything has happened in the intervening years to change this equation.
I'm not sure what state PUC or other state "obligations" you are referring to but state regulatory requirements as to service (and many other matters) on STB regulated railroads are generally unenforceable because they preempted by Federal law (called "ICCTA preemption"). The only remedies available for poor service or lack of service are those provided in the Interstate Commerce Act. Beyond that, although I'm no longer that close to Colorado state politics, I question whether the state has any real interest in the line. The 2004 line sale was clearly an effort by the state to wash its hands of the matter and get its money out of the line. The state never intended its ownership of the line to be a permanent thing (as shown by the fact that the state legislation authorizing the state's purchase of the line also directed that it be sold after a few years). I doubt that the state had any expectation that V&S would operate the line very long.
Some folks need a dose of reality. This line is dead and should have been torn up long ago, it ain't commin back. In the late days of the SP it handled a fair amount of traffic but it was basically a bridge from Tenessee pass to points east, very little online industry from Pueblo to the Kansas line and far less today. UP and BN have zero reason to utilize Towner as they can move their traffic on their own lines and Towner has no one else to bridge to. There is no longer any connection to K&O in Kansas.
I know the marketing folks at the K&O, previously CKRY and a decade ago there were only about 2 elevators on the entire segment that did occasional seasonal business of a handful of cars here and there. That isn't enough to justify a business and doesn't nearly justify costs of fuel, crews, track maintanance, taxes etc. There is no silver bullet on the horizon, no mining prospects or gas or oil near there (I was curious and asked some who would know) and although Colorado is not now in the drought conditions it had been in, it is easily and quickly cyclical so few want to invest in growing in that region. All across Eastern Colorado, small towns are drying up, as the older generations die off and the younger family members want nothing to do with farming. These familys, farms and communities are not coming back, a temporary repreive from the drought is not going to reverse this trend. This line runs mostly through Kiowa County which is quite large but total population is about 1500 and shrinking, there is no opportunity there and railraods are not going to create it for them.
For what volume of grain that is grown there it makes far more sense that instead of trucking over to Eads Colorado on the Towner line, to truck it maybe 40 miles more to the BN east west line in Southern Colorado. There just is no where near, nor is there anything forseeable that will create the kind of online traffic enough to economically justify the line. And forget tourist trains, the line runs through some of the most boring scenery to be found anywhere. It isn't close enough to a significant population center and has nothing to draw people to sell tickets.
I saw pictures of the line sometime this summer and it has had significant washouts. A&K is fine for some with an attitude or agenga to throw under the bus but they are a business in recycling old track, some need to face the fact that some rail lines are over and done due to regional or economic reasons that are not going away. A&K is merely trying to run a sucessful business in repurposing railroad materials that have no viable use in their current location, Towner line is clearly one of these.
Heating up:
http://www.stb.dot.gov/FILINGS/all.nsf/WEBUNID/4E274F1AD1F1AA6E85257F150052D0AC?OpenDocument
This is an initial part of what slot racer and falcon48 were not seeing. There is a whole lot of related "baggage" that has a good chance of being acted upon in addition to this. While A&K is a bad actor, they aren't the only ones abusing the abandonment process,... but adding their arrogant disregard for what happens after they gut a railroad corridor and leave a wide trail of destruction/ bad agreements/confusion in their wake, makes them persona-non-grata in this state. Wouldn't be surprised at all if some of them (A&K's employees, agents and proxies) find themselves threatened with civil fines and/or jail for their 3 past failures here.
They've already been called "scoundrels" in other dockets by the STB and others, which should have been a clear warning.
A few comments in response to mudchicken's latest post:
1. The "abandonment" V&S previously filed is completely voluntary. It is under no obligation to continue to pursue it. Further, even if the authority becomes effective, V&S is under no obligation to exercise it.
2. It's alway a little dicey predicting what a regulatory agency like STB might do. But I'll stick my neck out. The most STB is likely to do is to decide that this abandonment/discontinuance is too controversial for its expedited "notice of exemption" procedure, dismiss both the "abandonment" and revised "discontinuance" notices and direct V&S to file either a petition for exemption or an application for whatever regulatory authority they want. Another reason the might take this approach is because of the complaint the Colorado Wheat group filed against V&S. While this was not a "shipper" complaint, and doesn't automatically make a notice of exemption procedure unavailable, STB might use use this as justification for not allowing the notice of exemption to go forward. Note that neither of these options would force V&S to continue pursuing an abandonment. STB is very unlikely to require V&S to continue pursuing an abandonment that it now says it doesn't want.
3. More likely, the Board will deny the opponents' petition and allow the discontinuance to become effective. In the process of denying it, STB will note that the opponents' main interest seems to be in forcing V&S to sell the line to them. They will then note that the opponents have the ability to force a sale of the line that doesn't depend on an "abandonment" or an OFA ("offer of financial assistance", a forced sale procedure only available in abandonments). That avenue is a forced "feeder line" sale under 49 USC 10907 (the same procedure used on the Coos Bay, OR line). For all practical purposes, a forced feeder line sale on this line would be pretty much the same as an OFA. It would result in a sale at net liquidation value (NLV), the same as an OFA sale. The "discontinuance" authority V&S is now seeking wouldn't stand in the way of a "feeder line" sale. In fact, it would make the "feeder line" sale easier to get - there would be no issue as to whether the incumbent was providing adequate service (since the incumbent would be providing no service).
4. A&K has a real talent for coming across as the Darth Vader of the short line industry. But I don't know what A&K has supposedly done with its rail lines in Colorado that would make them, their employees, etc. subject to civil fines or jail. I would just point out, again, that the Interstate Commerce Act preempts most state laws and remedies involving services provided (or not provided) by an STB regulated railroad. As such, the only remedies available for failure or refusal to provide service, or providing inadequate service, are the remedies in the Interstate Commerce Act.
bump (4+ month old thread): I hope some folks are watching. STB is very close to forcing A&K materials to sell the line and STB is very aware of A&K Materials trying to game the system. Consequences?
Stay tuned
An STB decision purporting to "force" A&K to sell the Towner line under the so called "feeder line" section of the Interstate Commerce Act 49 USC 10907 is virtually a sure thing for the reasons stated in my earlier note. There's no drama here, The real drama is whether the purchaser will be able to raise the funds to buy it and operate it.
49 USC 10907 requires the STB to set the price of a forced sale at the higher of "going concern value" (GCV) or "net liquidation value" (NLV), and the purchaser must pay this price in cash. The Towner line almost certainly has no GCV, so the price will be NLV.
In its simplest terms, NLV represents the value A&K would receive by salvaging the line and selling the materials and real estate on the open market. In other words, the purchaser would have to make A&K whole by paying A&K the full value A&K would receive if it scrapped the line itself. If the purchaser can't come up with this amount in cash (90 days is usually the time limit imposed by STB), there won't be a sale.
Stay tuned.
It seems like either way, A&K wins.
This becomes the third time that A&K has been forced to divest itself of a railroad line. (Because they could not pull up the line, A&K already has taken it in the shorts and the NLV sale side of the Feeder line sale just digs in the spur a little more. If you read the KVCN/C&P application, A&K has some explaining to do to the STB as well. With the related STB review also in play, the abuse of the abandonment process is going to focus on this and the other junkman moves.
Falcon: The $$$ is there, no question. Including the rehab $$$. Could be fun to see A&K explain some of its past moves (to STB and Colorado PUC) on the line that are going to cost KVCN additional funds to fix because of A&K's callous neglect. As KVCN stated & can prove, they had no intention of running a railroad.
Well, we'll see what happens. Given the dismal traffic prospects on this line, the only way anyone is likely to put up money on this line is if they have a pretty solid right to the salvage proceeds if the line fails (as it will). If they know anything about the line, they won't provide anything for rehab that can't be recovered when the line is salvaged. Whataver happens, A&K will be made whole.
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