STB Rejects Tennessee Pass Revival

Written by Marybeth Luczak, Executive Editor
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Colorado, Midland & Pacific Railway Co. (CMPR), a wholly owned subsidiary of Rio Grande Pacific Corp. (Rio Grande), will not be able to go forward with the Tennessee Pass Line revival as filed, according to a March 25 decision by the Surface Transportation Board (STB), but the decision leaves open the possibility of re-filing.

On Dec. 31, 2020, CMPR filed “a verified notice of exemption under 49 C.F.R. § 1150.31” to lease from Union Pacific the majority of the line (163.1 miles) between Parkdale and Sage, Colo., and operate it. In a “verified notice of exemption filed concurrently,” Rio Grande sought “Board approval to continue in control of CMPR upon CMPR’s becoming a Class III rail carrier.” The exemptions, STB wrote in a Jan. 29 decision, would “not become effective until further order of the Board,” due to challenges from the Colorado Pacific Railroad, LLC (Colorado Pacific) and parent company KCVN, LLC, as well as other organizations and individuals who expressed environmental, safety and other concerns about reinstituting rail service.

Among the concerns: the “erroneous contention” that crude oil, coal or hazmat would be transported on the line and that crude oil trains from the Uintah Basin in Utah would traverse it, CMPR wrote to STB in a March 15 motion to amend the notice of exemption. It asked STB to “restrict the proposed lease of the [Tennessee Pass rail] Line against the transportation of crude oil, coal and hazardous commodities.”

In STB’s March 25 decision (download below), the agency wrote that CMPR’s verified notice of exemption filing “was submitted under the class exemption procedures found at 49 C.F.R. § 1150.31, which provide an expedited process for obtaining authority under 49 U.S.C. § 10901.”

According to STB, it “has often explained that these streamlined class exemption procedures are reserved for transactions involving routine, uncomplicated and non-controversial matters.”

Not only is the proposed transaction “highly controversial, but the verified notice of exemption and opposing submissions also raise unresolved questions that require more detailed consideration than the expedited class exemption process is designed to provide,” STB wrote, explaining its rejection of CMPR’s verified notice of exemption filing. “Issues raised in the comments include questions pertaining to potential environmental and competitive impacts of the proposed transaction, as well as questions concerning interchange operations and the nature of actual or anticipated operating rights over portions of the Line. UP’s arguments that ‘this is a routine, non-controversial short line lease transaction’ are not persuasive. And CMPR’s reply, while responding to certain specific allegations that its verified notice is false or misleading, does not sufficiently address the broader issues and concerns raised and the significant controversy surrounding the transaction. CMPR’s motion to amend does not resolve the controversy (which goes beyond transporting specific commodities over the Line), and its request that the Board restrict the proposed lease to authorize only certain types of rail service appears to be at odds with Board precedent and in any event would not be suitable for resolution under the class exemption process.”

STB concluded: “In light of the substantial controversy and unresolved issues requiring more detailed analysis that have been raised, the class exemption procedures are not appropriate for this case.”

STB noted, however, that the “rejection of the notice does not preclude CMPR from seeking authority to lease and operate the Line through more appropriate procedures that would allow for the more comprehensive review required here. Given that environmental concerns have been raised about the proposal in question, any such future filing should describe in detail the proposed operations and specify the number of trains that CMPR expects to operate in the reasonably foreseeable future.”

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