(The following story by George Ledbetter appeared on the Chadron Record website on February 23, 2010.)
CHADRON, Neb. — Nebkota Railway Inc. (NRI), the only company currently operating trains in Chadron, has withdrawn the objection it filed just two weeks ago to the purchase of the rail line from Chadron to Dakota Junction by a newly formed railroad company.
The move apparently clears the way for Nebraska Northwestern Railroad (NNW) to purchase the seven miles of track from Chadron to Dakota Junction from the Dakota Minnesota and Eastern Railroad (DME), and to lease an additional 20 miles of line from Dakota Junction to Crawford, where the tracks connect with the Burlington Northern Santa Fe (BNSF) network.
The railroad line through Chadron, once a part of the Chicago Northwestern Railroad’s ‘Cowboy Line’ across Nebraska, intersects the DME line from Rapid City, S.D. at Dakota Junction. From Chadron to the east only four miles of the Cowboy Line remain, with Nebkota as the owner.
West Plains Company, the parent company of Nebkota, announced in late January a plan to create a high speed grain loading facility along its four mile section of track, with $14.7 million of the project costs supported by federal stimulus funding.
Only a few days later NNW, a new company that includes a former Nebkota general manager George LaPray as its administrative manager, filed papers with the federal Surface Transportation Board (STB) seeking approval of its purchase and lease deal with DME.
The request for an “Exemption’ that allows the transaction to go forward, is normally a straight forward process that can be completed quickly, unless an objection is filed, according to an STB representative,
On Feb. 5, Nebkota and West Plains asked the STB to reject or delay approval of the sale, and on Feb. 18 it filed a request for a declaratory order “to terminate controversy and remove uncertainty..regarding the competitive impact and public interest” of the proposal.
In a prepared statement released last week, Bryce Wells, president of West Plains, said that allowing the NNW deal to proceed could restrict its market access to the other railroads. “Any serious impact on Nebkota economics by virtue of this proposed agreement will invariably impact farmers in the area and the future of the railroad,” Wells said.
In a phone interview last Friday, Jack Nielsen of Alliance, president of NNW, rejected arguments against the deal and said his company intends to work with Nebkota to move trains in and out of Chadron.
In a document filed with the STB on Feb. 12, Nebkota asserted that NNW has “no real prospects of handling any other traffic” than the current loads of wheat owned by West Plains. “The result of the purchase would be to make WPC and NRI hostage to NNW demands for a percentage of freight revenues,” the company said.
Nebkota also claimed that it would lose its interchange with the DME at Dakota Junction if the deal were approved.
In a response to the Nebkota papers, filed on Feb. 18, NNW said that it is making preparations to operate trains, and is not purchasing the track simply to get in the middle of Nebkota’s route. “NNW will not be a ‘paper railroad.’” the company said. “NNW fully intends to become a common carrier railroad and provide rail transportation service to patrons.”
Nielsen said in late January that his company had been working on the deal with DME since 2007, and that its purpose was in part to keep Chadron’s railroad line from being closed.
Since it was formed in 1994 and purchased the line from Chadron to Merriman, Nebkota has abandoned all but four miles of the 75 miles of track it once owned, but has continued to move grain from the West Plains elevators in Chadron via the connections to DME and BNSF.
The company’s main markets are in the eastern U.S., but it said the high speed loading facility in Chadron will allow it to reach additional customers to the west and south.
According to NNW, Nebkota will still have access to both the DME and BNSF, because of its trackage rights, which aren’t affected by the proposed purchase.
LaPray said in a statement to the STB that the owners of the new railroad are interested in preserving the track and operating a railroad. “NNW is owned by individuals with deep roots in the agricultural economy of northwest Nebraska,” he said. “This is not a situation in which investors outside the area are acquiring track with the unstated intent of driving off the traffic and harvesting the track materials.”
In the motion to withdraw the objection it raised with the STB, Nebkota indicates that the concern regarding the interchange issue has been resolved. “This action is taken in light of the Amendment of the Trackage Rights Agreement…to provide for interchange with DME at Dakota Junction,” the letter said.
The ultimate impact of the legal squabbling remains uncertain, but apparently both of the parties involved are committed to keeping a viable railroad connection from Chadron to major national markets.
“Nebkota has been in continuous operations for over 15 years and has continued to grow in volume of freight shipments, substantially the grain of local producers,” Wells said in his statement. “It has always been the intent of Nebkota to remain as a viable and integral component of local grain shipments and it will continue to do so.”