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Whistle Stopped

A proposed railroad merger threatens jobs throughout Colorado -- and, up in Minturn, a way of life.

The Turntable Restaurant is in a squat gray building that sits along the railroad tracks running through the small mountain town of Minturn. Just a stone's throw from the Eagle River, the Turntable will never be mistaken for one of the many shops and cafes in Minturn that sell howling coyotes to tourists. A mural that encircles the dining room shows the legendary rail route of the old Denver & Rio Grande Western railroad, running from the bright yellow fields of the great plains up rugged mountain passes and down into the redstone canyons of western Colorado and Utah. The walls are lined with pictures of steam locomotives chugging their way up some of the most treacherous rail lines in North America, shots of the old railroad turntable that gave the restaurant its name, and class photos going back to 1941 from the now-closed Minturn High School.

The Turntable is open 24 hours a day to serve the guests of the Railroad Hotel, a simple two-story building attached to the restaurant. The restaurant is open to the public, but the hotel is open only to railroad workers, two- and three-man crews on long hauls who move freight and coal over the Rockies. Here engineers and conductors for the Southern Pacific Railroad can enjoy the Turntable's famous green chile any time of day.

Chances are those workers will be served by Darla Goodell, who's worked at the restaurant for sixteen years. Goodell is a Minturn native, and her father and grandfather both worked for the railroad. She's one of those people who love nothing more than the sight of a freight train moving with awesome power through the bottom of a sheer Colorado canyon. "I can't imagine Minturn without the railroad," Goodell says with a sigh, a pained expression passing over her round, friendly face.

But the days of trains passing through Minturn may be numbered. As part of the planned $5.4 billion merger between the Union Pacific and Southern Pacific railroads, the 170-mile rail line that passes through Minturn and heads up Tennessee Pass and on to Salida, Canon City and Pueblo will be abandoned. The Southern Pacific uses the line as an alternate route to its east-west corridor through the Moffat Tunnel, running sixteen to twenty trains a day. But Union Pacific, by far the dominant partner in the proposed merger, would have no use for it. The historic line, the first to link the Front Range with western Colorado, could be sold to a competing railroad. Or it could become a victim of corporate economics, as Union Pacific and Southern Pacific unite to create a mega-railroad that will have monopoly status in much of Colorado.

The prospect of such a merger has alarmed many Coloradans, from coal miners in Craig to wheat farmers in Kiowa County. But it has support in much more powerful quarters. And concern on the part of shippers and farmers hasn't stopped most of Colorado's elected officials, including Governor Roy Romer, from endorsing it.

The fate of the line through Minturn will be settled next month, when the federal Surface Transportation Board is scheduled to rule on the proposed merger. And while corporate executives, high-powered lobbyists and politicians hold closed-door meetings to ponder the future of the two railroads, those whose lives have been touched by the whistles of passing trains are left to wonder what will come next. "We've got people dealing with this who are sitting behind a desk," says Harold Bellm, who served as mayor of Minturn for eighteen years and frequently dines at the Turntable. "Their concern is what happens to the railroad company, regardless of what happens to the small towns on the route."

Most people in Minturn want the railroad to stay, says Bellm, but they know the ultimate decision will be made 2,000 miles away in Washington, D.C. And the effects of such a decision on Minturn could extend far beyond the railroad right-of-way. If the rail line is closed, eighty acres of land in the Southern Pacific switchyard will come on the market. For old-timers in Minturn, that's a frightening thought: The town is just down the highway from the booming Vail-Beaver Creek corridor, and real estate developers are already stopping by the Turntable to check out the eighty acres, valued at $30 million.

"The vultures are already looking around," says Goodell, who watches all the activity from a small apartment in the Railroad Hotel that's filled with mementos of a life on the rails, including a working model railroad that hangs from her living room ceiling. The company that owns the Turntable Restaurant contracts with the Southern Pacific and other railroads to operate a network of cafes in isolated spots around the country. Goodell has traveled in the cabs of freight trains to work in railroad restaurants in the southern California desert, New Mexico and Kansas. For a woman who'd spent most of her life in a small town, life on the rails was a revelation.

"You get to meet lots of people," she says, recalling the camaraderie of railroad employees who run trains through some of the most remote parts of the country 24 hours a day. "The Rio Grande railroad was like one big family," she says of the fabled rail line that was absorbed into the Southern Pacific in 1988 as part of a $1.8 billion deal orchestrated by Denver billionaire Philip Anschutz, who became a railroad player after making a fortune in oil and gas.

As much as she loves the rail line running through Minturn, Goodell knows its days as a rail town may be drawing to a close. She dreams of starting a rail museum to preserve Minturn's heritage, and she's tracked down an old Rio Grande dining car in Grand Junction that she wants to bring to the town. "I've even gotten estimates on what it would cost to move it," she says.

Goodell already has enough railroad memorabilia in her apartment to stock a small museum, including a collection of signal lanterns, old Union Pacific and Rio Grande timetables, and dozens of vintage photos that show trains passing through Minturn in turn-of-the-century snowstorms and steam locomotives being moved around on the turntable. "I don't have enough room to put all the photos up," she says. "My daughter used to complain about all the railroad stuff around the house."

Southern Pacific officials have told Goodell they can't make a decision on what to do with the vintage dining car before the merger, and Goodell fears the car will be dismantled for parts in the meantime. Like everyone else in Minturn--a town founded by the Rio Grande in 1887--Goodell will have to wait to see how the decisions made by powerful people far away will affect her hometown.

"The railroad is part of our life--I hate to see it go," says George Sisneros, a former city councilman who frequently enjoys the daily lunch specials at the Turntable. "Everyone sees the writing on the wall. We know it's coming, and we're trying to deal with it."

The forces that may doom the railroad in Minturn are formidable and involve some of the wealthiest, best-connected players in Colorado. Along with Anschutz, they include Denver's most powerful law firm, Brownstein Hyatt Farber & Strickland, one of whose name partners, Tom Strickland, is now conducting a run for the U.S. Senate. Together those interests are working full-time to push through a merger that will deprive huge parts of Colorado of any rail service and cost the state more than 1,000 jobs while making Anschutz hundreds of millions of dollars.

When the merger was announced last August, it was estimated that Anschutz would make more than a billion dollars off the deal, quintupling his original investment in the railroad. And the corporate dream team he assembled to run the Southern Pacific won't go begging, either. According to Trains magazine, the railroad's top officials will split a $12 million golden parachute should the merger go through. Chairman and chief executive officer Jerry Davis will leave with a particularly sweet deal: Trains reports that the railroad has agreed to forgive the remainder of a six-figure home loan Davis received for his Denver-area mansion.

Anschutz put together a $1.8 billion deal for the Southern Pacific in 1988, but $800 million of that was assumed debt, and most of the rest was borrowed. The Denver mogul merged his Rio Grande into the Southern Pacific, then began laying off employees and slashing costs to pay off the huge debt he'd taken on to acquire the larger railroad. While many beleaguered Southern Pacific employees resented Anschutz, Wall Street cheered as the railroad began to turn a profit for the first time in years.

If he can pull it off, the $5.4 billion sale of the Southern Pacific--which is essentially what the proposed merger would amount to--would be the biggest deal of Anschutz's career. It would also create the largest railroad in the country, a Union Pacific behemoth with 37,000 miles of track radiating from Chicago to Seattle and from Los Angeles to New Orleans. The only significant rail competition for Union Pacific would come from Burlington Northern Santa Fe, which has routes along Colorado's Front Range and in eastern Colorado and was itself created by the 1995 mega-merger of its carriers. In the western two-thirds of Colorado, there would be just one rail line.

Union Pacific has made it clear it will have no use for the Tennessee Pass line that runs through Minturn if the merger goes through. "It's slow and difficult to operate," says John Bromley, a Union Pacific spokesman at the railroad's Omaha base. "We'll divert most of that traffic to southern Wyoming." The small towns along the route that owe their existence to the railroad will lose a big part of their history. But the biggest losers in the buyout will be the 1,500 Coloradans who will see their jobs disappear, including most of the employees at Southern Pacific's administrative building in downtown Denver.

"A lot of the younger people are worried," says one longtime Southern Pacific employee who asked not to be named. "They're liable to get sent around the country. We've been through so many crises in the last 25 years, we all feel like survivors."

And some fear that the railroad merger could also decimate whole industries in Colorado, especially mining and agriculture. Union Pacific, for example, plans to abandon a former Missouri Pacific rail line that runs from Pueblo to Towner on the eastern plains, serving farmers and grain shippers on what once was the route of the MP's heralded Colorado Eagle passenger train. That part of southeastern Colorado is already depressed, and the prospect of losing a major rail line is alarming to farmers. "We're concerned about being served by a single railroad and losing an affordable means of shipping," says Andy Colosimo, spokesman for the Colorado Farm Bureau. "That area is really struggling. This could be another nail in the coffin."

Coal interests also view the pending merger with alarm. It will be cheaper for Union Pacific to move coal from the flat Powder River Basin of eastern Wyoming than to extract it from the rugged country of northwestern Colorado and Utah. Some believe the newly expanded railroad could easily encourage its customers to buy Wyoming coal, potentially throwing hundreds of Colorado miners out of work and shutting down the coal mines.

"It's more expensive to transport the coal out of the Rockies," says Alex Jordan, director of the Salt Lake City-based Western Shippers' Coalition, which represents railroad customers. "The key factor is price. If you have one carrier serving both markets, it's cheaper for them to push Powder River coal. The danger is, you lose your Rocky Mountain coal and the economy goes bust. You could devastate a region of western Colorado and Utah. It's crucial to these areas."

Farmers and miners, however, have traditionally been captive customers for railroads due to the sheer bulk of the products they produce. While other industries can move their products by truck, coal and grain producers depend on the railroads to move thousands of tons of freight over vast distances. If Union Pacific decides to jack up fees on its western Colorado and Utah route, those industries will be at the railroad's mercy.

"Unlike other industries like airlines, it's practically impossible to lay new rail lines to compete with an established railroad," says Paul Dempsey, director of the transportation law program at the University of Denver. "The railroads will have an incentive to extract as much from people as they can."

If Union Pacific gets its way, the only line still serving western Colorado after the merger will be the Moffat Tunnel line that runs through Winter Park and then parallels the Colorado River into Grand Junction. And Dempsey thinks Union Pacific may decide to shift traffic from that line to its main route through southern Wyoming. The relatively flat route, through Laramie and Rock Springs, is one of the busiest transcontinental rail lines in North America, with 65 freight trains per day moving at speeds of up to 70 miles per hour. It's also a consistent cash cow for Union Pacific, and Dempsey fears the railroad may be tempted to simply shut down the high-maintenance Moffat Tunnel line, which winds through a series of smaller tunnels before reaching its namesake bore beneath James Peak.

"That last remaining [western Colorado] route will become less viable," Dempsey predicts. "If the Moffat Tunnel route is shut down, most of the state won't have rail service."

Union Pacific, however, insists it wants to haul Colorado coal. "We're interested in hauling coal anywhere," says Bromley. "Most of the coal mined in the Powder River Basin goes east and south. The Colorado coal goes to different markets. Union Pacific wouldn't make some sort of arbitrary decision to move Wyoming coal instead of Colorado coal."

Bromley says that far from attempting to carve out a new monopoly, Union Pacific is responding to competitive pressure. Last year's merger of the Burlington Northern and Santa Fe created the largest railroad in the country, boasting highly efficient and profitable routes between Chicago and the West Coast. Bromley insists that Union Pacific and Southern Pacific need to combine forces to deal with competitive pressure from BNSF. "The thing driving all of this was the combination of the Burlington Northern and Santa Fe last year," he says. "That skewed things and made them a formidable competitor. Without this merger, they'll dominate rail traffic in the United States."

And in anticipation of the charge that the merger would create a monopoly railroad between Denver and the Bay Area, Union Pacific has offered trackage rights along the Moffat Tunnel route to BNSF. Under such an arrangement, the competing railroad is allowed to use its competitor's tracks in exchange for a fee. But BNSF has made no commitment to run trains through western Colorado, and skeptics like Alex Jordan believe the proposed trackage fee is so high that the railroad won't be interested. He says western Colorado and Utah may be headed back to the bad old days of the robber barons.

"Monopoly is a real concern," says Jordan. "It's almost like a feeding frenzy of blue fish. If you're a swimmer, you can get your arm bit off. It's so easy to gouge the customer, it's like, 'Why not?'"

Railroads were notorious in the nineteenth century for exploiting farmers and small businesses that had no alternative way to ship their goods. The Southern Pacific, in particular, was known for its stranglehold on the entire state of California, a monopoly that was a frequent target of muckraking journalists like Frank Norris. His novel The Octopus portrayed a railroad so powerful that governors and congressmen would do backflips to keep it happy. Critics of the proposed merger charge that Philip Anschutz and Union Pacific have created just such a political machine for the 1990s, greased with generous donations to friendly officeholders and dedicated to pushing through a railroad with monopoly power.

Those critics are particularly critical of Roy Romer, who endorsed the merger in March. "Romer let down the employees and the shippers and the communities within the state," says William Gulliford, general chairman of the Brotherhood of Maintenance of Way Employees, which represents 350 railroad workers in Colorado. "If this merger goes through, it will be devastating, but it doesn't seem to concern the governor."

Like many others opposed to the merger, Gulliford believes Anschutz used his immense wealth to win Romer's ear. Anschutz is a prominent fundraiser for the national Republican Party, but he personally signed a $5,000 check for Democrat Romer's 1994 re-election campaign. "Roy Romer and Phil Anschutz are close, there's no secret to that," Gulliford says. "If Romer runs for the Senate, who has the deep pockets?"

Even without Anschutz on board, Union Pacific's political influence is powerful. With major operations in twenty states, the railroad is a player in legislatures and congressional delegations in almost every western state. In Colorado the railroad has retained the services of Cole Finegan, an attorney at Brownstein Hyatt Farber & Strickland, known for its links to Romer and most of the state's congressional representatives. Finegan is Romer's former chief legal counsel and is frequently seen at the governor's side, even accompanying Romer on hunting trips. Meg Porfido, Romer's chief of staff, is a former Brownstein Hyatt attorney.

Union Pacific chairman and CEO Drew Lewis carries his own form of political clout. Lewis served as secretary of transportation under President Ronald Reagan and later played a big role in creating the Surface Transportation Board, which will have the final say on the merger. And because Union Pacific is the country's largest railroad contributor to congressional campaigns, Lewis is ensured an open door as he makes the rounds on Capitol Hill.

Under Lewis, Union Pacific has often butted heads with the U.S. Justice Department, which is known for its opposition to anti-competitive mergers. The railroad boss has described the Justice Department as being full of "anti-business, pro-Clinton people." When the former Interstate Commerce Commission was abolished by Congress last year, authority over rail mergers would have passed to Justice, and Lewis lobbied hard behind the scenes to make sure that didn't happen. He convinced Congress that authority over mergers should be given to the Surface Transportation Board instead.

The STB will announce its decision in early July. But an unlikely coalition has formed to oppose the merger, including many railroad customers, the conservative American Farm Bureau and the AFL-CIO. The opponents are demanding that, as a condition for approval of the merger, Union Pacific be required to sell several Southern Pacific lines to competing railroads. Southern Pacific's central corridor--the line from Kansas City to Oakland, California, that passes through Minturn--is among the routes critics want to see auctioned off. Montana Rail Link, a successful regional railroad in the Northwest, has already offered $614 million for the central corridor. Not surprisingly, Union Pacific is fiercely opposed to selling that line to a competitor.

"If I were a betting person, I'd bet the merger gets approved," says Dempsey. "The $64,000 question for Colorado is whether it includes a spinoff of some pieces of the railroad to Montana Rail Link."

Dempsey believes Romer botched an opportunity to influence the federal government on that score when he endorsed the merger. In return for his seal of approval, Union Pacific promised only to turn the Tennessee Pass right-of-way over to the state for use as a recreational trail and to keep open the Southern Pacific's Burnham Shops facility in Denver, where locomotives are serviced and rebuilt. "He walked away with commitments that are fairly meaningless," Dempsey says. "As long as the state subjected to the monopoly doesn't object, why should the federal government care?"

In his March letter to the Surface Transportation Board, Romer hardly painted a rosy picture, acknowledging that "Colorado in many ways would experience more serious impacts from the proposed merger than any other state." Colorado "faces the potential loss of over 2,000 jobs, our communities will experience the abandonment of over 300 miles of rail lines--close to 50 percent of all abandonments identified in the merger application--and our shippers are among those most directly affected by the combination of the two major rail competitors in the central corridor," the governor wrote.

Nonetheless, Romer endorsed the merger. While most states in the region have signed off on it, two of the states that share the central corridor route with Colorado--Utah and Nevada--have not. (Texas also opposes the merger.) Jerry Smith, deputy director of the Colorado Department of Local Affairs, served on a task force Romer set up to consider the UP-SP deal, and he met with Romer repeatedly to discuss the merger. He says the general feeling in Colorado was that the state shouldn't interfere with the private marketplace. "There's a fine line between having a pro-business climate and dictating to business what their policies should be," he says. "Having a strong railroad serving Colorado is in the state's interest."

Smith believes many of the fears of merger opponents are based on speculation. "A lot of the discussion is based on what might happen," he says. "It's conjecture what will happen five or ten years in the future." The task force, he notes, heard divergent views on the impact of the merger on Colorado, with some people suggesting the merger might actually help business in Denver, even if it hurt rural areas of the state. "If Denver shippers can get their goods to the West Coast faster through southern Wyoming, is that a bad thing?" Smith asks. "Market forces will determine what gets used and what doesn't."

Though the state is ready to hop aboard the merger express, several federal agencies have declined a ticket. Earlier this month the federal departments of Justice, Agriculture and Transportation announced their joint opposition to the merger as now proposed. The Justice Department estimated the new mega-railroad would cost consumers an additional $800 million per year due to reduced competition, and agriculture officials said higher rail fees would hurt American grain exports.

But Union Pacific's Bromley says the railroad isn't as powerful as its opponents charge. He insists that the federal agencies' opposition to the merger shows Union Pacific isn't the well-oiled political machine its critics make it out to be. "If we were so well-connected, we wouldn't have had all those headlines about Justice and Agriculture being against us," he says. "I wish we were that powerful."

The lunch-hour rush at the Turntable is winding down. And if anyone doubts this is a railroad restaurant, the clock on the back wall will let them know otherwise. The clock's hands spin around a cartoon train passing through the mountains, and every hour on the hour, the train's whistle blows and the lights on a rail-crossing sign flash. Soon it may be the only train whistle heard in Minturn.

Only about 40 of Minturn's 1,500 residents still work for the railroad. Once dependent on the Southern Pacific and the local mines for survival, the town is now populated by people who work at jobs related to the ski industry. But Minturn still prides itself on being a workingman's town, and residents desperately want to maintain the non-glitzy, small-town feeling that sets its apart from its neighbors in the Vail Valley. Many of the humble one-story homes now sell for $200,000, but old-timers vow a fight before they'll let Minturn become just another resort town. They especially fear a real estate free-for-all if the railroad departs and eighty acres of vacant land hit the market.

"This is a place where people can buy a home and raise their kids," says Bellm. "It's a different world when you drive into Minturn than when you drive into Vail or Avon. That's why people live here.

"If they vacated all the railroad land, you'd see all of Minturn change," Bellm adds. "If it happens overnight, there would be such a flow of people coming in it would be like Central City or Black Hawk. You'd have an awful time trying to control it."

City Manager Richard Dangler, another Turntable regular, says Minturn wants to keep its identity, even as developers float proposals for the Southern Pacific land--including visions of new homes, a gondola to lift skiers three miles to the Eagles Nest summit, and a parking garage. "This town has a 100-year existence," Dangler says. "It's not Beaver Creek. Everyone in the valley comes here for Halloween because it's the only place that has a Main Street and neighborhoods. It's the only place where you can go door-to-door trick-or-treating. You can't do that in Vail."

The old turntable that gave the restaurant its name once was used to move steam locomotives into sheds where railroad mechanics performed basic maintenance. The Rio Grande kept a large crew of mechanics in Minturn, and the railroad linked the isolated mountain town with the rest of the world. As a boy, Bellm remembers seeing hoboes come through town on the train. "They might stop here and try to get something to eat," he recalls. "Then they'd move on."

The turntable was abandoned with the advent of diesel locomotives in the 1940s, but it still makes its presence felt. The Railroad Hotel was built on top of the aging mechanism, and every now and then the building settles, and doors in the hotel become jammed. "Sometimes we hear people yelling because they can't open the door in their room," Goodell says with a laugh.

Goodell thinks the railroad is a big part of what makes Minturn unique, and she's dreading the day the last train passes through town. She fears that along with its loads of freight, that final train will take part of the soul of Minturn with it. "I grew up here, but if they put a ski lift here, I'm leaving," she says. "We don't need this to be a little Vail.

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