Washington Companies to terminate Montana Rail Link lease

Montana Rail Link, the Missoula-based railroad company owned by billionaire industrialist Dennis Washington, announced Monday that it will terminate a long-term lease of its tracks through southern Montana and return them to owner BNSF Railway.

The deal means that BNSF, already a dominating force on Montana’s rail network, will again control the vast majority of active railroad track in the state. According to the Montana Department of Transportation, Texas-based BNSF operates on 59% of the state’s rail system. By taking back MRL, it will control 84% of that network

In a press release issued Monday evening, BNSF and MRL officials said that all current MRL employees, both union and non-union, will be able to keep their jobs “with similar pay, benefits, seniority, and other terms of employment.” What exactly that looks like in practice for many MRL employees will come down to negotiations between the railroads and their unions. The deal between the two companies will require approval the U.S. Surface Transportation Board, the federal regulator that oversees railroads, a process that could stretch on for months.

MRL employs more than 1,200 people and oversees 937 miles of track in Montana and Idaho. The rail line MRL runs on was built by the Northern Pacific Railway in the 1880s.

In 1987, Dennis Washington forged an unusual agreement with BNSF predecessor Burlington Northern: BN would lease to Washington its then-lesser-used route through southern Montana between Huntley (near Billings) and Sandpoint, Idaho, for 60 years, while BN focused on its northern route across the Hi-Line. Washington also purchased outright some branch lines, including routes that connected towns like Polson and Darby to the main line. BN (and later BNSF) continued to route some of its own freight traffic via the southern part of the state even after MRL took over the line.

In recent years, a larger percentage of the freight traffic that traversed MRL — upwards of 90%, officials said —was moved on behalf of BNSF. The MRL-owned branch lines also began to play a decreasing role in generating freight traffic (MRL stopped running on the branch lines to Polson and Darby in the early 2010s).

By having BNSF take the line back over, the two companies say freight traffic will move more efficiently through the state. Both companies assured Montana businesses that use the southern rail line that their freight rates will not change, noting that in most instances BNSF already sets those prices.

“There have been many changes in the rail industry since this long-term lease was signed, and given the need to be competitive in the current environment, we believe that this was the right time to revisit our longstanding agreement with BNSF,” said Derek Ollmann, president of MRL. “This agreement protects our workers, our customers, and our long-term commitment to safety, and it will ensure a more seamless operation of rail services in Montana.”

While many MRL employees Montana Free Press spoke with were surprised at the news, railroad officials insisted that those workers would not be negatively impacted by the deal. MRL executives were planning to meet with employees across the rail system in the coming days to answer questions about the transition. BNSF officials also tried to calm fears about the change. The MRL lines would become known as the “MRL Subdivision” and be incorporated into BNSF’s Montana Division (BNSF operates 32,500 miles of track in 28 states, and splits that network into smaller regional operating divisions).

“We welcome the MRL team and customers back into the BNSF family,” said BNSF President and CEO Katie Farmer. “We will continue to invest in this business, provide great service and maintain the highest level of safety just as we have for over a century in Montana. This will best position employees, customers and the communities we serve for future success.”