South Dakota leaders back rail for coal

South Dakota leaders back rail for coal

South Dakota’s top elected officials joined business leaders Tuesday to urge approval of a $2.3 billion federal loan for the Dakota, Minnesota & Eastern Railroad’s expansion plan.

The project, which would haul coal from Wyoming’s Powder River Basin to Midwest power plants, also would create thousands of jobs and boost the rural economy in South Dakota and surrounding states, supporters told a top U.S. Transportation Department official during a public forum.

“The issue at hand is one of the most important issues our state has faced in many, many years,” Sen. Tim Johnson, D-S.D., said during the hearing. “We have a once-in-a-lifetime opportunity now.”

Sen. John Thune, R-S.D., said the project could change South Dakota’s entire economy by lowering shipping rates for grain, improving the hauling of ethanol and other products and boosting the supply of coal to power plants.

“I think this project has the potential to have a transformational effect on South Dakota’s economy. It’s that big,” Thune said.

Earlier in the day, opponents met with reporters in Huron to denounce the project, which they argue will harm some cities by running many trains through business and residential areas at high speeds. They also contend the project will never succeed financially.

“You get the idea someone’s trying to pull a fast one,” said Mike Pulaski, who works at a medical clinic in Pierre. “They can’t repay their debt.”

But DM&E President Kevin Schieffer said the project is financially feasible. The railroad has a good business plan and will get the federal loan and private financing only if it can prove the project will succeed, he said.

The railroad’s owners are not interested in getting loans they cannot repay, Schieffer said. “From a shareholder standpoint, if there is a problem in paying it back, they lose the company.”

For nearly a decade, DM&E has worked on a project that would rebuild 600 miles of track across South Dakota and Minnesota and add 260 miles of new track to reach the Powder River Basin coal mines. The project would cost an estimated $6 billion, with $2.3 billion coming from the federal loan and the rest from private funding.

The DM&E secured federal regulatory approval for the project earlier, but it is now seeking loan approval from the Federal Railroad Administration. The FRA will take public comment on the project until Oct. 10, and it then has 90 days to decide whether to approve the loan.

Tuesday’s hearing featured a selected list of government officials and business leaders who told Jeff Shane, undersecretary of the U.S. Transportation Department, that the loan should be approved. South Dakota’s entire congressional delegation and Gov. Mike Rounds joined business leaders and agricultural organizations to urge approval of the loan.

Before the hearing, Thune and Johnson took a brief ride on a DM&E train to view an area west of Huron that would become the railroad’s operational center if the project proceeds.

Schieffer and the South Dakota officials repeatedly said 55 of 56 communities along the route support the DM&E expansion project because they understand it will boost the economy. The Mayo Clinic and the city of Rochester, Minn., continue to oppose it because they contend the increased rail traffic could threaten the safety of the clinic’s patients.

DM&E has a bad safety record, and the increased flow of trains at high speeds could increase the risk of a spill of hazardous material, the clinic argues. The rail line runs only a few blocks away from the Mayo Clinic, and the Rochester group wants DM&E to build a bypass around the city.

But at Tuesday’s hearing, Sioux Valley Health Systems President Kelby Krabbenhoft of Sioux Falls said rail lines run close to medical facilities in other places without causing any safety problems. The DM&E project will not pose a safety risk to health care facilities, he said.

“Replacing an old railroad line with a new one will improve safety,” Krabbenhoft said, drawing cheers at the hearing. “The DM&E will not harm health care anywhere.”

Opponents said some communities appear to support the rail project because elected officials have made agreements with DM&E, but they said the majority of residents in Pierre and Brookings oppose the increased train traffic.

Larry Melvin, who owns a business near the track in Pierre, said the increased train traffic will cause a lot of problems because the rail line runs through much of the city’s business district.

“It’s dangerous,” Melvin said. “You can’t have that kind of speeding bullet come through town.”

Copyright © 2006 Associated Press.

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