The Surface Transportation Board (STB) on April 8 reported authorizing Genesee & Wyoming’s Central Oregon & Pacific Railroad Inc. (CORP) to lease and operate approximately 27.58 miles of line in Eugene, Ore., allowing Union Pacific (UP) to transfer local service to CORP. All four Board members concurred, and STB Member Robert E. Primus provided a separate expression.
According to the STB, CORP on Dec. 10, 2024, filed a verified notice of exemption to lease from UP and operate the line in Eugene. The Board subsequently ordered the short line to serve a copy of its notice of intent on the Brotherhood of Railroad Signalmen (BRS), as required by the Board’s regulations. CORP on Feb. 11, 2025, certified that it had served the required notice on BRS and the International Brotherhood of Electrical Workers. In the STB’s April 8 decision (download below), it denied requests to reject the notice of exemption in this proceeding and allowed the transaction to move forward. “The Board finds that the transaction may increase efficiency and reduce costs and that authorizing operations by CORP may result in better local service,” reported the STB, which noted that “[n]umerous shippers voiced support for the transaction, citing CORP’s customer service track record and focus on providing outstanding local service.”
UP in an April 9 statement to Railway Age said: “We look forward to a smooth transfer as we work together to provide our customers the service we sold to them and grow together.”
Background
CORP, which Genesee & Wyoming acquired in 2012 as part of its purchase of RailAmerica, operates 306 miles of line, 58 in California and 248 in Oregon (see map below). The railroad interchanges with UP at two locations—Eugene (Springfield Junction, UP Brooklyn Subdivision) and Black Butte, Calif. (UP Black Butte Subdivision)—and with Flat Iron Rail at Montague, Calif.; and Rogue Valley Terminal Railroad, White City, Ore.
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UP in December 2024 said the proposed Eugene, Ore., service transfer to CORP would allow it “to reduce the number of times a railcar is handled and create greater efficiencies, while providing more flexibility and agility for both railroads to meet current customer needs and anticipated growth, enhancing customer service for local businesses and supporting regional economic growth.” Additionally, UP and G&W reported at that time that both companies were “working with customers to ensure a smooth transition once the plan takes effect.” UP added that it had been in contact with employees impacted by the change, “providing information about continued employment opportunities, including potential openings at CORP or other G&W railroads. Union Pacific employees who deliver goods over longer distances will continue to work out of Eugene Yard [in Oregon].”
Robert Primus Weighs in
In a separate expression to the STB decision, Robert Primus said that while he voted to approve the CORP-UP transaction, he “did so with conflicting sentiments.” On the one hand, he pointed out, “I see this as a big win for The Central Oregon and Pacific Railway (CORP) and the more than twenty shippers in the Eugene and Springfield areas served by Union Pacific,” as CORP “has developed a solid reputation for its customer-centric service and commitment to safety” and “has provided consistent and reliable service to customers along its service lines” since being acquired by G&W. Primus said that he expects such service to continue when the lease transaction is consummated. “As I have publicly stated, our nation’s short lines truly are the growth engines of our freight rail network,” Primus noted. “Their white glove service has enabled many short lines to experience double digit growth, even as growth among Class I’s has been relatively flat.”
However, “while there are clear winners within this transaction, there is also a clear loser, and I am especially concerned about the negative consequences confronting affected members of the various rail labor unions who, in all likelihood, will either lose their union jobs or see a decreased workload as a result of this transaction,” Primus said. “Profit over people, time and again, has proven to be a disastrous formula for the network. I find myself wondering if this is this truly an effort on behalf of UP to provide its customers with better service or yet another cost cutting measure seeking to lower its operating ratio to further satisfy the appetite of short-term investors. Judging by UP’s zeal to reduce labor costs over the past couple of years, I’m willing to put my money on the latter having factored into UP’s final decision. And, unfortunately, under 49 U.S.C. § 10902(d), the Board may not impose labor protection for transactions such as this one, involving acquisitions by Class III carriers like CORP. My appeal to UP is that they do all that they can to minimize the impact on its union employees.”
Lastly, Primus said, “this transaction appears to be the beginning of a trend of local divestment for UP, with the recent announcement of a deal with Jaguar Transport Holdings LLC to provide local operations in the Kansas City terminal. If this is indeed the case, then UP should consider empowering its short line partners with greater authority to grow business for UP.” Railroading, he noted, “is a service-oriented business that requires a strong local personal touch. Short lines are more engaged in direct, day-to-day relationships with their customers and have become better suited to listen, adapt, and respond to changing customer needs, including the need to grow. Accordingly, UP should allow its short lines partners the ability to sell capacity, chase spot opportunities and ultimately become an additional sales channel for UP, with pricing authority and the ability to cooperate in capital expenditure sharing to make it easier for shippers to make long-term commitments. A collaborative effort structured in this way will not only strengthen the relationship between UP and its short line partners but establish a strong model for sustainable growth. If UP can do this, then it might really be onto something special.”
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UP CEO Jim Vena addressed the CORP and Jaguar Holdings deals on April 7 at the American Short Line and Regional Railroad Association’s annual meeting, noting they are “just the start.” Why? UP can grow business, he pointed out, by teaming with partners that can help “remove some of the inefficiencies that are in the system and … drive value to our shareholders and our customers.” How can small roads work with UP? Vena said the baseline is that they “do a better job than a Class I. No Class I, or especially Union Pacific, wants to give up any part of their line haul revenue or the revenue to somebody else … So how do you win if you’re a short line, and how do you get the Class I’s to get over that? You have to be very cost effective. You have to be much more efficient cost-wise than a Class I is.” He noted that UP is also looking for partners that are in it for the long haul. UP is “open for business,” Vena said. “So if any of you are interested, please get a hold of people at Union Pacific, and let’s move ahead now,” he told attendees.
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