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Durango railroad agrees to pay $20 million for 416 Fire damages

D&SNG also must make ‘substantial’ operational changes over the next 10 years
The 416 Fire burns down Hermosa Cliffs on June 6, 2018, above U.S. Highway 550. The Durango & Silverton Narrow Gauge Railroad on Monday agreed to pay $20 million to compensate the United States for damages caused by the fire. (Jerry McBride/Durango Herald file)

Durango & Silverton Narrow Gauge Railroad and its parent company, American Heritage Railways, have agreed to pay $20 million to settle a federal lawsuit stemming from the 416 Fire.

D&SNG, American Heritage Railways and the U.S. Attorney’s Office for the District of Colorado announced Monday that the parties had reached a settlement in which the railroad agrees to pay $15 million up front, an additional $5 million plus interest over 10 years, and agrees to modify the company’s operations to reduce future wildfire risk.

A hand crew makes its way to the 416 Fire on June 4, 2018, along U.S. Highway 550. The 416 Fire burned about 54,000 acres north of Durango. (Jerry McBride/Durango Herald file)

“The Durango & Silverton Railroad represents an important historic and cultural icon in southwest Colorado,” said U.S. Attorney for the District of Colorado Cole Finegan in a news release. “We intend for this settlement to enable the Railroad to continue to operate, but in a manner that will avoid causing future catastrophic wildfires. In addition, this agreement ensures fair compensation for the damages caused by the 416 Fire.”

In addition to the payments, D&SNG will change its operations to reduce wildfire risk, including limiting its use of coal-powered locomotives.

According to the legal agreement entered into by D&SNG, American Heritage Railways and the federal government, the railroad must:

  • Comply with an Industrial Fire Restrictions Plan that places limits on the railroad’s operations when fire risk is elevated and prohibits operations when fire risk is extreme.
  • Prepare and submit an Operating and Fire Prevention Plan to the U.S. Forest Service annually.
  • Retain an independent consultant who will inspect, report on, make recommendations and audit D&SNG’s fire mitigation and prevention measures annually.
  • Hire a full-time fire management officer who will provide monthly certification of compliance with the above plans and reports.
  • Maintain a minimum of $3 million in wildfire insurance coverage and conduct an annual review to determine the economic feasibility of additional insurance coverage.
  • Create a self-insured wildfire fund which D&SNG will contribute $100,000 per year and can be used to pay for costs arising from wildfires caused by the railroad.

D&SNG will also stop operating coal-burning locomotives during times when fire risk is high.

The railroad has already taken preemptive action to transition much of its operations from coal-burning locomotives to diesel and oil burning locomotives.

Cres Fleming, who lives on Irongate Way, was one of the first at the scene of the 416 Fire, which started June 1, 2018, north of Durango. Fleming tried to extinguish the blaze before it topped a hillside and got away.

So far, D&SNG has converted five of its eight steam locomotives from coal to 100% recycled oil, according to a company news release. D&SNG has also purchased four new diesel trains for passenger travel to Silverton that are currently in operation.

The railroad has employed both types of locomotives over the last two tourism seasons and it will only be operating oil-burning and diesel locomotives for passenger service and maintenance during the upcoming summer, according to a D&SNG news release.

“As part of the settlement, the D&SNGRR has now partnered with both the BLM (Bureau of Land Management) and the USFS (U.S. Forest Service) to contract obligations on all parties to address the change in environment and the warming trends in the Southwest in a collaborative effort to further protect our nation’s forests,” said D&SNG Special Projects and Operations Manager Matt Cunningham. “While this is consistent with what the railroad has done through its policies, procedures, equipment and training since D&SNGRR purchased the railroad in the 1980s, opening new lines of communication and collaboration are ultimately going to benefit all parties involved as well as the communities of Durango and Silverton.”

The federal government sued D&SNG and American Heritage Railways in July 2019, accusing the railroad of starting the 416 Fire, which burned about 54,000 acres north of Durango.

A map showing the burn area of the 416 Fire as of July 9, 2019, when the fire had scorched 54,129 acres north of Durango. (Courtesy of the fire incident command team)

More than a year after the 2018 fire, the Forest Service concluded that a cinder from the smokestack of one of D&SNG’s coal-burning locomotives ignited the blaze.

According to a news release from U.S. Attorney’s Office for the District of Colorado, private fire investigators who also investigated fire came to the same conclusion.

Attorneys for the federal government brought their case using Colorado’s Railroad Statute, which says that railroad companies operating their “line of road” with Colorado are liable for all damages from fires caused by the railroad operations.

The government was seeking $25 million in damages to compensate firefighting and rehabilitation costs and other damages for the fire, which largely burned in San Juan National Forest.

An air tanker drops a load of fire retardant June 7, 2018, on Hermosa Cliffs during the 416 Fire. (Jerry McBride/Durango Herald file)

The agreement between D&SNG and the federal government announced Monday is separate from a civil lawsuit filed in September 2018 by lawyers for dozens of homeowners and businesses in Southwest Colorado who accuse the railroad of missteps and negligence that led to the 416 Fire and damages to their properties and businesses.

Attorneys in the civil lawsuit were relying on the same Colorado Railroad Statute as lawyers for the federal government to pursue their case against D&SNG.

However, D&SNG and American Heritage Railways have also reached a settlement in the civil case, said Bobby Duthie of Durango law firm Duthie Savastano and Brungard, who filed the initial complaint.

“I'm allowed to say only that the matter has settled,” Duthie said.

A Durango & Silverton Narrow Gauge Railroad train being pulled by two locomotives in March 2021 near Shalona Hill. The doubleheader pulling extra cars is led by an engine converted to burn oil. (Jerry McBride/Durango Herald file)

Details of D&SNG and American Heritage Railways’ settlement with homeowners and businesses were not immediately available Monday evening.

The settlement of both lawsuits marks the end of years of litigation. Though D&SNG has reached agreements, the railroad continues to deny that it caused the 416 Fire and maintains that the railroad has been committed to safety and high standards of operation.

Monday’s agreement was not an admission of D&SNG’s liability, according to a release from the U.S. Attorney’s Office.

D&SNG and Florida-based American Heritage Railways expressed relief that the lawsuits were behind the train and the railroad could move on from the 416 Fire.

“This has been a very long and tedious process and I am thankful to have it past us,” American Heritage Railways COO John Harper said in a news release. “All parties in the State and Federal cases have come to a resolution and now it’s time to move forward and create a better future.”


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