End of the Line or Back to the Drawing Board for DM&E Coal Trains?

There is a broader solution. With proper leadership we will find it.

Now that the Federal Railroad Administration has told the Dakota, Minnesota & Eastern railroad that it is not going to give it the hoped-for $2.3 billion loan to expand into the Powder River Basin, is that the end of a decade-long dream for the DM&E’s CEO Kevin Schieffer?

The answer is: No one knows. Schieffer at least in public has said he’s not throwing in the towel. The Surface Transportation Board and the FRA have approved the project, just not the massive loan. The Mayo Clinic and other opponents along the route haven’t scheduled any victory parties. And freshman Congressman Tim Walz, whose upset victory last fall came partially because of his opposition to the loan, is holding out an olive branch saying, yes, we want the railroad to upgrade and succeed, but no, we’re not crazy about the coal.

Ten years ago when Kevin Schieffer set off on his quest to turn the Class II DM&E into a Class I railroad, he thought he had a surefire solution: Extend his fledgling regional operation into the coal-rich PRB and begin shipping America’s last remaining supplies of relatively cheap fossil fuel to coal hungry power plants in America’s heartland. Though there were already two railroad lines servicing the area, his new route would be shorter and more direct to points east. It sounded like a can’t-fail plan.

more insideYet he didn’t anticipate the opposition that would arise along the way from a vast and diverse myriad of interests. Despite this opposition he kept pushing forward, but partially because of the opposition the project grew more expensive. Would-be investors started to get nervous. So Schieffer turned to his old friend John Thune, a newly elected senator from South Dakota, for help. Thune obliged by adding a last-minute provision into the massive 2005 Transportation Bill that would all but assure the DM&E of a low-interest, taxpayer guaranteed federal loan that would cover about 35% of the cost. It seemed like a slam dunk.

Citizens, the media and all but a handful of legislators didn’t find out about this provision until after the behemoth bill was passed. Soon the media were trumpeting the DM&E PRB expansion project as a done deal: You can’t fight both the railroad and Congress.

But they forgot to ask a few folks along the way. While the environmental opposition had faded away after a series of Surface Transportation Board decisions favoring the railroad that were upheld in court, there was still strong opposition from ranchers in Wyoming, citizens in Brookings, S.D., and above all, the Mayo Clinic and the City of Rochester, Minn. The latter two, which had been fighting the expansion quietly for years, suddenly swung into full combat mode, pulling out all the stops