As local governments and homeowners feud over the future of the biggest transit project in the Twin Cities, a small freight train company holds very good cards in shaping its design and cost.

The Twin Cities & Western Railroad wields as much clout over plans for the Southwest Corridor light-rail line as do the communities where it would run — maybe more.

"It seems like they are in the driver's seat," said Edina Mayor Jim Hovland, a lawyer involved in planning the light-rail line.

That reality was driven home this week as consultants funded by the railroad industry refused to help light-rail planners after meeting with the railroad.

Railroad power helps explain why the Metropolitan Council, the agency overseeing the light-rail project, spent months creating a costly reroute of freight traffic from the Kenilworth Corridor of Minneapolis to St. Louis Park over that suburb's objections.

The reroute is offered as a way to make room for the light-rail line in Kenilworth and as the lead alternative to another costly and controversial option — keeping the freight in Kenilworth and digging tunnels nearby for the light-rail tracks.

Whatever its decision, the agency likely will need approval from the railroad, which operates in Kenilworth — between Cedar Lake and Lake of the Isles — under a long-standing local government agreement and federal regulations that protect the nation's freight commerce.

The regulations are enforced by the U.S. Surface Transportation Board (STB), whose approval is usually needed to shut down freight lines. Typically, that happens when a railroad seeks permission to abandon service because a line is no longer economical.

A local government can try to force a railroad to give up a line for a greater public purpose, but "it's a very high burden … to win," the STB said. Nationwide, local governments won STB approval to close tracks over the objection of railroads just three times in the past four years.

Rerouting a freight line doesn't require STB approval if it maintains the same freight-hauling capacity as the line being shut down. But if a railroad objects that a reroute doesn't replace existing capacity, the local government would need to convince the STB that it does. Officials at the board can't recall a recent case where that argument was raised.

"It wouldn't be easy," said Andreas Aeppli, a specialist in freight railroads for Cambridge Systematics, a Massachusetts transportation consultancy. The regulations "give the railroads a fair amount of leverage."

Even if the government were to prevail, he said, it could take a year or more for a decision by the board.

$200M solution?

The TC & W is running freight at 10 miles per hour in the Kenilworth corridor, but it says that those tracks have the capacity to handle faster trains and that any reroute must do the same.

So the Met Council offered to spend $200 million to straighten curves and build berms as high as two stories in St. Louis Park to flatten grades to allow faster speeds and longer trains.

Metro officials balked at the cost. St. Louis Park residents complained that the berms would divide the city and that any reroute would bring more train traffic to their community.

St. Louis Park, Minneapolis and other cities along the future light-rail line to the southwest suburbs have clout to influence the plans because they can withhold consent, triggering negotiations that would delay or jeopardize the project.

Agreement from '90s

The freight problem began in the 1990s when the Minnesota Department of Transportation, while reconstructing Hwy. 55, moved the freight line that ran along 29th Street in Minneapolis onto land in the Kenilworth Corridor owned by Hennepin County, with its permission.

County officials say the move was intended to be temporary. They point to 1997 legislation by former state Sen. Steve Kelley, DFL-Hopkins, who represented St. Louis Park, as evidence that the suburb agreed to take the freight in exchange for funds to clean up a contaminated site.

"This project is going to be at the top of the list. We're going to get the site cleaned up and that construction done so that the trains can run through St. Louis Park as soon as possible," Kelley testified at a committee hearing in comments later cited by the Hennepin County attorney's office. The legislation authorized funds to clean up the site "and to provide adequate right of way for a portion of the [freight] rail line."

Hennepin County Commissioner Gail Dorfman, who was mayor of St. Louis Park at the time, understood that the freight tracks could be moved to make way for future light rail in Kenilworth. St. Louis Park officials deny that there was a commitment, saying the suburb agreed only to consider taking the freight.

But a 1998 agreement between the county and TC & W gives the railroad — tiny by industry standards, with just 70 employees — a big voice in whether the freight will ever be rerouted.

The county leases the track to TC & W under terms that allow it to stay in the corridor until the reroute originally planned for St. Louis Park "becomes operational, or at such time as any other feasible alternative … satisfactory to TCW becomes available and is operational."

The Met Council backed away from a cheaper reroute plan without two-story berms after the railroad said it wouldn't work and wasn't safe.

'Operational alternative'

"It really comes down to Twin Cities & Western … making the determination that we've provided an operational alternative," Dorfman said. "I've asked, 'Why didn't we have a tighter agreement?' "

The Hennepin County attorney's office, which crafted the agreement, declined to comment.

"Unless the railroads have an alternative that they accept … they're probably not going to move," Dorfman said. "If we tried to force it, that would probably be settled in the courts."

Even if the lease were canceled, federal law would preserve the railroad's right to keep operating unless the government won STB approval to evict it, the board said.

For years, Hennepin County was in charge of planning the Southwest light-rail line. It handed off the project to the Met Council three years ago without solving the freight rail problem.

The Federal Transit Administration, which is expected to pay half the cost, told the Met Council it needed to settle the freight dispute before advancing the light-rail line.

The freight reroute and tunnel options could bring the price to more than $1.5 billion.

"It seems like the way everyone has been deferential to TC & W, that … they're in there as long as they want to be," Edina's Hovland said of the Kenilworth line.

Pat Doyle • 612-673-4504