Union Pacific decides not to bid on port project between U.S., Mexico

Union Pacific has abandoned plans to bid on a proposed railroad project between the U.S and a planned port in Mexico, an official with the railroad said.

Company officials say their decision means Yuma County will no longer be considered for the project because Union Pacific owns all existing rail lines in the area.

"This almost certainly closed the door on a route in Yuma County," said Chris Peterson, Union Pacific director of government affairs. "It would be very unlikely that another railroad would propose (and build) a new route to go through Yuma County. Plus, we don't make a practice of allowing another railroad to use our track."

The company official would not give a concrete reason for the change in plan from Union Pacific, but did say acquiring information from Mexico officials about project specifics was one of the company's most frustrating challenges.

"This decision was based on strategic reasons," he said, declining to say more on that issue.

Peterson added that Yuma County's ongoing development actually presents a growing challenge to any kind of railway expansion plans.

"Every day that goes by that someone isn't preserving land for a new rail line makes it a lot less likely that it will happen," he said.

Peterson made the company's official announcement Tuesday at The Sun's office, after alerting Yuma city officials.

He stressed, however, that Union Pacific leaders believe that the project is needed and a worthwhile investment - just not for them now.

"We think the project is viable," Peterson said, adding that proponents of the project aren't likely to lose momentum. "The Mexican government is very much interested in seeing the port and rail proposal go through. It's just a matter of who is going to bid on it."

The company confirmed in August 2006 that they were studying the feasibility of extending a new railroad from Punta Colonet, Baja Calif., to Yuma.

Mayor Larry Nelson said he couldn't be any happier about Union Pacific's decision to abandon its plan to bid on the proposed railroad project.

"I didn't see a single advantage for the city of Yuma for that railway to come through here," Nelson said.

Speaking from a cost factor, Nelson said several railroad crossings would have needed to be built and with each one costing between $10 to $20 million and the railroad company only being required to pay 5 percent of that amount, it was just not a good deal for the city.

"There was just no way to justify paying for it from a tax-base standpoint," Nelson stated. "If Union Pacific would have put in some sidings to serve new industries that would have come in as a result of the railroad being here, then it would have been a better deal."

Nelson added that he also had concerns over whether the railway would have served the new U.S. Port of Entry at San Luis, Ariz., since the company never responded to a letter he sent it. He went on to say that he never saw a route other than the initially proposed County 14th Street and Avenue 3-1/2E route.

The railroad plan inspired both opposition and support in Yuma County, where opinions ranged from fears of encroachment to predictions of a great economic boom.

Other railroads have expressed interest in this project, but Union Pacific was one of the major railroad companies examining the proposal.

Union Pacific had expressed interest in possibly bringing the line through the Yuma area and connecting it to the company's Sunset Route, which carries 45 to 50 trains every day through Yuma from Los Angeles to El Paso, Texas.

The site of the proposed port, Punta Colonet, is a small town south of Ensenada, Baja Calif. Proponents of the rail-port plan have always pointed to the fact that shipments from Asia to North America are expected to double and ports in California are already very busy.

Tuesday was the May Day holiday in Mexico, and Mexican government officials could not be reached for reaction to Union Pacific's decision to withdraw from bidding.

Union Pacific's Peterson said that although the company's decision Tuesday may have seemed sudden to the public, company leaders knew from the onset that the plan presented challenges.

"We always knew it was extremely uncertain," he said. "There were a great number of hurdles that had to be crossed for the project to become a reality. It's not a huge surprise that we would reach a point where we would decide not to proceed and pursue the bid."

Peterson said, for example, that Mexico had never published the rules and deadlines for the bidding process. According to previous articles in The Sun, the Mexican government was expected to announce bid specifications in May; according to Peterson, the government had not released it as of Tuesday afternoon.

"There were a lot of unknowns," the rail official said, adding how those factors delayed so much local planning. "The biggest cloud hanging over the project in Yuma County was the uncertainty of where the route would be. We couldn't have healthy conversations without it (more information from Mexico). I regret that we never got to that point."

He added that any local opposition to the plan did not discourage Union Pacific. Peterson stressed that having more concrete plans in place could have eventually persuaded critics.

The Yuma-based group Arizona for Common Sense proved to be one of the rail-port's loudest critics, saying they opposed the plan's possible local routes, not the overall vision itself. Founding member Paul Muthart said he didn't know if losing the chance for railroad development amounted to good or bad news for Yuma County. Muthart stressed that proponents were never able to convince him of the plan's economic promises.

"In my mind, they failed to adequately demonstrate to me how our community would benefit because of this railway," Muthart said. "They haven't really done anything more than speculation. The position we've always wanted was the truth."

He added, though, that he could point to a positive side to not having rail expansion.

"I know we won't have the traffic congestions, safety issues, train smoke on the crops, noise and vibrations," he said.

Jesus Lara, representative of landowners at Punta Colonet, said Union Pacific's announcement was "bad for the project," indicating that there could be "internal political matters" in the United States.

Lara said there were concerns that Union Pacific and Hutchinson Port Holdings, an international port company based out of Hong Kong, were going to partner and monopolize the project. The Sun has previously reported conflicting statements from the two companies on their alleged partnership.

"But (Union Pacific) withdrawing is worse, because it now may be that the project will face problems," Lara said.

Lara said he doesn't believe Union Pacific is withdrawing from the project because of uncertainty about how the Mexican government is handling the bidding process and bidding requirements. "Discussion is advancing here. The main obstacle involving the concession that a mining enterprise has over the land is still to be resolved and we believe that the bidding requirements can be published in two weeks," he said.

Hutchinson Port Holdings does not have an office located in the United States, according to its Web site. It does operate a port at Ensenada. Due to the holiday, Hutchinson Port Holdings officials in Ensenada could not be reached for comment.

Union Pacific is the largest railroad company in North America, followed by Burlington Northern Santa Fe. That latter railroad, which operates more in northern Arizona, has also expressed interest in the rail-port plan, as have at least four other railroad and port companies. Calls to Burlington Northern Santa Fe officials were not returned Tuesday.

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Darin Fenger can be reached at dfenger@yumasun.com or 539-6860. Sun staff writer James Gilbert and Bajo el Sol staff writer Cesar Neyoy contributed to this report.

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EDITOR'S NOTE: Story updated at 10:42 p.m.