The D&S didn't "lose" their regulated status, they chose to seek legislative exemption from being regulated by the Colorado Public Utilities Commission as a regulated intrastate railroad. This happened back about 1999--the dates a bit fuzzy in my memory--but soon after Al Harper took active control of the D&S, one of the first things he had his new Vice President Jeff Jackson do was to approach the two legislative members to the state legislature from Southwest Colorado to introduce a bill to exempt the D&S because they wanted to be treated as an amusement operation rather than as a regulated public utility. That effort was delayed a year when the legislators were faced with the fact that they had not even informed the 2 counties and 2 towns involved of their impending bill before the legislature, and this in the face of the dismal start of operations of the D&S the previous year under a management team that to Harper's credit, he replaced. After a year of smooth operations, the establishment of a joint Durango/Silverton Advisory Committee that met with Harper and his staff, the bill was reintroduced with no local opposition and the D&S was, except for safety regulations, exempted from regulatory control.
Fritz