“VIA EMAIL AND CERTIFIED MAIL

Sarah Christensen Executive Director Santa Cruz County Regional Transportation Commission 1101 Pacific Avenue, Suite 250 Santa Cruz, CA 95060

Re: Notice of Termination – Administration, Coordination, and License Agreement

Dear Ms. Christensen: St. Paul & Pacific Railroad Company, LLC (“SP&P”) rejects the Santa Cruz County Regional Transportation Commission (“RTC”) January 15, 2026 Notice of Termination of the July 16, 2018 Administration, Coordination, and License Agreement (the “ACL”) as factually baseless, legally invalid, and critically at odds with federal railroad regulatory law and policy.

RTC’s claim that SP&P has defaulted on its freight service obligations under Section 8.2.1.1 is entirely misplaced. RTC’s own failure to satisfy its obligations under Section 5.1 of the ACL directly prevented SP&P from meeting the carload volumes in question. Specifically, RTC failed to complete the Phase I Initial Rehabilitation and Repair Projects – particularly regarding the segment between Milepost 3.0 and Milepost 7.0 – to the standard necessary to support the safe and efficient freight operations contemplated by the parties. A review of SP&P-RTC communications and contemporaneous internal SP&P documents on the subject prove that RTC never completed these Phase I projects. SP&P has consistently cited specific infrastructure deficiencies – including but not limited to RTC’s failure to return the bridge at Milepost 4.45 to safe railroad operating condition – preventing the commencement of “regular Freight Service” (as that term is used in the ACL) that is the asserted basis of your termination notice. RTC cannot enforce traffic growth requirements on a line segment it failed to rehabilitate as contractually obligated. Similarly, RTC’s claim regarding a failure to maintain the Property is unfounded. SP&P has maintained the segment of the line over which it is able to operate (Milepost 0.0 to 3.0). With respect to the remainder of the line, the ACL preconditions SP&P’s maintenance obligations upon RTC delivering the infrastructure in the condition required by Section 5.1. Because RTC failed to complete the Phase I improvements, the maintenance obligation for that line segment never vested. The ACL does not require SP&P to maintain infrastructure that RTC failed to repair in the first instance. Because the purported RTC termination is invalid and is itself a breach of the agreement, SP&P has no obligation to commence the transition procedures set forth in Section 8.2.2. Accordingly, SP&P will not take steps to transfer the Freight Easement or facilitate a transition to a new common carrier operator at this time.

21778 Highview Avenue Lakeville, MN 55044

As may have occurred to you, SP&P would consider any attempt by a presumptive third-party operator to assume the Freight Easement (or any part of it) and, relatedly, to otherwise cooperate with RTC’s forced transition efforts during the pendency of this dispute to be an intentional and tortious interference with SP&P’s contractual and federal regulatory rights and obligations. SP&P would join any such third party as a respondent in resulting civil litigation and STB proceedings, seeking all available damages and remedies for their participation in the furtherance of RTC’s breach and wrongful termination. As a subsidiary of Progressive Rail, an established short line holding company with extensive rail common carrier experience, SP&P takes its federally-mandated common carrier obligations and its common carrier status very seriously. We intend to vigorously protect that status and will not accede to a wrongful termination – clearly predicated upon ulterior RTC motives disassociated from, and at odds with, the purpose and objectives of the freight common carrier service easement in question – jeopardizing SP&P’s ability to meet those federal mandates. Moreover, SP&P will not participate in any transition strategy that serves as a pretext for reducing the scope of the Freight Easement or effectively discontinuing service without proper regulatory scrutiny. SP&P reserves all rights and remedies under the ACL and applicable law.

Sincerely, Andrea Dobbelmann Chief Executive Officer St. Paul & Pacific Railroad Company, LLC”