New Mexico Moves to Spur UP Intermodal Hub

New Mexico’s legislature could be poised to exempt Union Pacific Railroad from a locomotive sales tax, to entice UP to build a major intermodal and multi-purpose rail facility just inside the state border near El Paso, Texas.

The Senate voted 37-4 on March 14 to give UP an exemption on its fuel use that the state estimates would cost it $1.9 million a year, provided UP builds the terminal in Santa Teresa. The House must still vote on the measure before the legislative session ends March 19, and Gov. Susana Martinez wants it to pass so construction can start this year.

Past legislatures approved the exemption and former Gov. Bill Richardson also supported it, but the project was delayed past earlier schedules. The new exemption would kick in starting in July 2013.

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UP already has sizable facilities about 15 miles away at El Paso, which is one of several major gateways for intermodal and other rail traffic moving to and from Mexico. But it needs to expand and increase efficiency with the modern engineering a new intermodal facility would bring, although a railroad spokesman said UP will continue to operate at El Paso should it go ahead with the Santa Teresa project.

UP says it will spend more than $400 million there to build an intermodal switching yard, an intermodal ramp for regional traffic, a fueling facility for its trains and crew change buildings. The site is on the railroad’s major east-west corridor between the California seaports at Los Angeles and Long Beach and major rail hubs at Dallas and Houston, plus a major north-south route up to Chicago.

UP has planned since 2006 to build the New Mexico facilities, contingent on getting favorable fuel tax treatment similar to that of Texas and some other states in which UP operates.

The railroad says if the project goes forward it would generate 3,000 jobs in the construction phase starting this year and running through 2015, and the facility would eventually support 600 permanent jobs.

-- Contact John D. Boyd at jboyd@joc.com.