Durango & Silverton Narrow Gauge Railroad agrees to pay damages for 2018 fire and modify railroad operations to reduce wildfire risk

DENVER – The U.S. Attorney’s Office for the District of Colorado announces an agreement with the Durango & Silverton Narrow Gauge Railroad Company and its parent company, American Heritage Railways, under which the railroad will pay $20 million to compensate the United States for damages caused by a 2018 fire near Durango and will also modify railroad operations and take other measures to reduce the risk of wildfire ignition.

“The Durango & Silverton Railroad represents an important historic and cultural icon in southwest Colorado,” said United States Attorney Cole Finegan. “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.” 

“When finalized, the proposed settlement and subsequent operational changes will help protect southwestern Colorado’s communities, cultural, and natural resources from future wildfires,” said Frank Beum, Regional Forester for the United States Forest Service. “We look forward to continuing our partnership with the Durango and Silverton Narrow Gauge Railroad Company and American Heritage Railways,” he added.

Bureau of Land Management Acting Colorado State Director Stephanie Connolly said, “BLM is committed to investigating all human-caused fires and finding ways to prevent wildfires on public lands. Working with the U.S. Forest Service and the railroad, this settlement will include an Industrial Fire Restrictions Plan to help reduce the risk of wildfires like the 416 fire from happening again in Colorado.” 

The agreement arises from a lawsuit involving the “416 Fire,” a wildland fire that was ignited on June 1, 2018, on the San Juan National Forest near Durango. The 416 Fire burned more than 54,000 acres of federal lands until it was fully suppressed approximately six months later. The fire damaged natural habitat, caused erosion, and caused other natural resource damages on federal lands within the San Juan National Forest.  It also threatened private residences, requiring emergency evacuations. The federal agencies, including the U.S. Forest Service and the Bureau of Land Management, that responded to and suppressed the fire incurred significant costs.   

An investigation by federal fire investigators concluded that the 416 Fire was caused by particles emitted from a smokestack on a coal-burning steam train engine owned and operated by the railroad. Private fire investigators, who also investigated the ignition area, reached the same conclusion. 

In July 2019, the United States filed a lawsuit against the railroad in federal district court in the District of Colorado seeking to recover damages for the fire.The United States sued the railroad relying on a Colorado state statute that requires railroad operators to pay money damages for fires caused by their operations. 

After several years of litigation, the United States and the railroad reached an agreement to resolve the claims. The settlement is set forth in a proposed consent decree. The court will review the consent decree and determine whether to approve and enter it. Under the terms of the proposed consent decree, the railroad will pay the government a $15 million lump sum payment within 45 days, and then will pay an additional $5 million, plus interest, over a ten-year period. In addition to these monetary payments, the consent decree will require the railroad to undertake substantial operational changes over a ten-year term, including:

1. The railroad will comply with an Industrial Fire Restrictions Plan (which is an exhibit to the consent decree, and is publicly available). This Plan places limits on the railroad’s operations when fire risk is elevated and prohibits operations when fire risk is extreme.
2. The railroad will prepare and submit to the U.S. Forest Service, each year, an Operating and Fire Prevention Plan.
3. The railroad will retain a qualified independent consultant who, each year, will inspect, report on, make recommendations, and audit the railroad’s fire mitigation and prevention measures.
4. The railroad will hire a full-time, qualified fire management officer, who will provide monthly certification of compliance with the aforementioned plans and reports.
5. The railroad will maintain a minimum of $3 million in wildfire insurance coverage and conduct an annual review to determine the economic feasibility of additional insurance coverage.
6. The railroad will create a self-insured wildfire fund, which will be funded by the railroad at a rate of $100,000 per year and may be used to pay for costs arising from any wildfire caused by the railroad.

If approved, these measures will reduce the fire risk associated with the railroad’s operations. They will also provide the public some minimum insurance against fire-related damages from the Railroad’s operations. Notably, under the proposed consent decree, the Durango & Silverton Narrow Gauge Railroad will no longer operate coal-burning locomotives during periods of elevated fire risk. This change arises from the consent decree’s requirement that the railroad comply with the Industrial Fire Restrictions Plan. Since the lawsuit was filed, the Durango & Silverton Narrow Gauge Railroad has begun converting its locomotives to oil-based engines, instead of using coal-fired engines. 

The railroad denied, and continues to deny, that it caused the 416 Fire, and the settlement is not an admission of the railroad’s liability.

Private parties filed a separate lawsuit in Colorado state court against the railroad seeking damages for claimed harms to their property, lost revenues, and other damages. The United States is not a party to that case, and those private parties’ claims are being resolved separately.

The federal case was handled by Assistant U.S. Attorneys Jacob Licht and Katherine Ross, with assistance from Assistant U.S. Attorneys Nick Deuschle, David Moskowitz and Andrew Soler.