Union Tank Car Company pulls the plug on storage of its oil tankers in the Adirondacks, dealing Iowa Pacific a second major setback

December 27, 2017

The plan by Iowa Pacific Holdings and its owner/CEO Ed Ellis to use the Adirondack Park as a junkyard to store thousands of out-of-service oil tanker railcars has hit significant stumbling blocks in the recent days. Last week, the Cuomo Administration announced plans to petition the federal Surface Transportation Board (STB) to reject use of the Sanford Lake Railway, which stretches 30 miles from North Creek to the Tahawus Mine in Newcomb, for storage of used, out-of-service oil tanker railcars. Ed Ellis has claimed that he could store between 2,000 and 3,000 railcars along the 30-mile line. Ellis will now have to lawyer up and fight the state in the official proceedings before the STB.

Ellis has repeatedly attempted to extort money from the state, saying he would stop storage if the state paid him to do so. He has bandied a figure of $12 million to the state to buy-out the Sanford Lake Railway. Ellis has used extortion techniques in other parts of the U.S.

Last night, things got even harder for Ellis as his main client for storing out-of-service oil tankers, Union Tank Car Company, called for Ellis to pull its oil tankers out of the Adirondacks. So far he had brought in around 80 oil tankers. Here’s the statement from the company that was released last night:

Union Tank Car Company Orders Removal of Its Railcars from Adirondack Park

(December 26, 2017) – Union Tank Car Company today announced it has ordered removal of all of its railcars from New York’s Adirondack Forest Preserve. A total of approximately 65 empty, cleaned tank cars owned by Chicago-based Union Tank Car had been temporarily placed on rail lines controlled by the Iowa Pacific Railroad. Removal of all 65 Union Tank Car units is expected to be completed by mid-January 2018.

“As we have previously explained, all railcar owners store idle railcars from time to time until they can be returned to active service,” said William Constantino, General Manager-Leasing for Union Tank Car. “We select the storage provider, but not the precise storage location. We regret the railroad’s decision to place some of our railcars in the Adirondack Park, which raised public concern about their effect on the park’s beauty and environment. We are acting to remove all Union Tank Car units from the Adirondack Park as soon as possible, relocate them to other areas outside the state of New York until they are returned to service, and ensure none of our cars are stored in the Adirondack Park in the future.

Union Tank Car Company and its Canadian affiliate, Procor Limited, are subsidiaries of Marmon Holdings, Inc., a Berkshire Hathaway company. They are unaffiliated with Iowa Pacific Railroad, owner of the rail lines in the Adirondack Park. Any railcars that remain in the Adirondack Park after removal of the 65 Union Tank Car units will not be affiliated with Union Tank Car, Procor, Marmon, or Berkshire Hathaway.

This decision came down from the top tiers of Berkshire Hathaway and is a major blow to Ed Ellis’s shaky railroad. Ellis has failed to utilize the Sanford Lake Railway to haul minerals, mine tailings and overburden aggregate rock from the Newcomb Mine for commercial purposes up and down the East coast. His business plans for the Sanford Lake Railway have been a bust.

Similarly, Ellis has failed to make any money with his Saratoga & North Creek Railway, which operates tourist trains and other excursion trains between North Creek and Saratoga Springs. Ellis leases these rail lines in Warren and Saratoga Counties from Warren County and the Town of Corinth. All enterprises there too have been a bust. Ellis’s plans for storing railcars in the Adirondacks, including on tracks that traverses the Forest Preserve and run alongside the Hudson, Boreas and Opalescent Rivers, has met with strong opposition from local government officials, environmental groups, and the general public.

Iowa Pacific Holdings, of Chicago, Illinois, has transported nearly 100 out-of-service oil tanker rail cars to the remote Sanford Lake Railway in the central Adirondacks for storage indefinitely. Now, the largest owner of these oil tankers has told the company to get them out of the Adirondack Park.
The vote of no confidence in using the Adirondacks as a junkyard for old oil tankers from Union Tank Car Company, along with the opposition of Governor Andrew Cuomo, is likely to ripple across the industry and sharply reduce any other railroad car companies that seek to store their fleets. Ed Ellis and Iowa Pacific Holdings will probably find few new takers for storing excess railcars in the Adirondacks. Any company seeking to work with Ellis will probably only be those, like Ellis, who are a few steps away from collapse and who show little concern for community values and environmental protection.

Protect the Adirondacks has been working to stop this plan for the last three months. We published a video with local government partners in opposition to this plan. The New York Times also highlighted PROTECT’s work to fight this misguided plan.


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