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Perhaps there was a celebration in our governor's office Wednesday morning when the U.S. Surface Transportation Board approved the merger of the Union Pacific and Southern Pacific railroads.
Gov. Roy Romer supported the merger -- despite a provision in our state constitution which forbids the merger of parallel or competing railroads.
He supported the merger, even though it meant a loss of jobs in Colorado.
The merged UP and SP proposed to abandon two long stretches of track in Colorado. One is the former Missouri Pacific line east from Pueblo to Herington, Kan. The other is the old Denver & Rio Grande Western main line west from Cañon City through the Royal Gorge, up the Arkansas River, and across Tennessee Pass.
Think of the major Southern Pacific routes in and near our mountains as a triangle. The west corner is Dotsero, a few miles east of Glenwood Springs. From there the Moffat Tunnel Route goes east to Denver, the north corner. From Denver, the Joint Line goes south to Pueblo. From Pueblo, the Royal Gorge Route goes west to Dotsero.
Romer said that merger or no merger, the Royal Gorge
Route was doomed -- the Southern Pacific has been trying
to abandon it for years.
Odd, then, that the SP spent big money along the line a few years ago to expand two tunnels on the west side of Tennessee Pass, so that the enlarged bores could accommodate double-stacked container cars and three-high auto carrier cars that are too high to fit through the Moffat Tunnel.
To be competitive with other railroads, SP needed to haul those large cars between the Bay Area and the Midwest, and so SP needed the Royal Gorge Route.
The SP certainly wasn't trying to abandon it, despite what our governor said. Wednesday, the STB said the Royal Gorge Route is vital -- regulators denied the UP's request to abandon it, even if our governor said it was expendable.
Another Romer stretcher came when there were proposals
from other operators interested in acquiring all or part of
the SP's Central Corridor
between Oakland and Kansas
City.
The big proposal came from Montana Rail Link, a profitable regional railroad that runs from Billings, Mont., to Sandpoint, Idaho.
MRL wanted to buy tracks from the Bay Area to the
Midwest and operate a competing transcontinental.
The plan included the entire former D&RGW system in
Colorado, and MRL didn't intend to abandon any of it.
Romer could have supported that. It would have enhanced rail competition in Colorado, and preserved service to all current rail shippers. But apparently Colorado's industrial economy isn't important to Romer -- he'd rather have a hiking trail.
Nor did Romer support Western Rail, a smaller plan from some Midwestern capitalists. It, too, would have preserved service in areas that the UP wanted to abandon.
First, Romer told them that he couldn't endorse their plan unless they demonstrated that they had the capital. They arranged for adequate financing for the $60 million deal.
Then he said he couldn't support any proposal unless he saw an operating plan.
This sounds reasonable on its face, but look a little deeper. SP, which has the tracks now, didn't release any operating information -- locomotive assignments, maintenance equipment, that sort of thing.
MRL had to use D&RGW figures, almost a decade old, and Western Rail pretty much had to build its operating plan from scratch.
Now, move to UP, which has offered BNSF (a product of a merger last year, and the only other big railroad in the West) trackage rights on the Moffat Tunnel Route and on west to California. This will supposedly preserve competition.
But when I called UP and asked if there was a BNSF
operating plan for those tracks -- things like crew change
locations and locomotive service terminals -- I was told
we'll work that out after the merger.
So there was no operating plan for an important part of the merger -- BNSF access to shippers west of Denver. If Romer thought operating plans were so important, why didn't he demand one from the UP and the BNSF?
Other governors, notably Republican George W. Bush of Texas, somehow found the backbone to oppose the rail merger unless their states were protected from monopoly.
But Romer demanded that potential operators meet standards that he did not impose on his billionaire buddy, Phil Anschutz.
Anschutz currently owns 26 percent of the Southern Pacific, and stands to make about $1.5 billion in the merger -- presumably tax-free, since it involves an exchange of stock. Anschutz bought the SP in 1984 for $1.7 billion. He's since sold about $1.5 billion of its real-estate assets, and he's sold off a lot of the stock.
So Anschutz comes out well. Colorado doesn't. So who does Romer really work for?
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