Ag interests cry ‘foul’ over DM&E loan rejection

Opinions versus fact Obviously, somewhere in the middle of your diatribes the facts have been lost.  Its clear that your intention here is to pontificate your Opinions and Speculations.  You berate the Ag Community essentially telling them they’re stupid, while you have no facts to support your position.

The reality of the matter is that law is based on precedent, and I find it very interesting that you banter about the evils of the DM&E, when in reality both the BN and UP were originally started with huge government subsidies and land grants.  The precedent to provide financing for this rail road project already exists, but I guess the NIMBY concept, when coupled with large amounts of money from Mayo Clinic has won out.

Speaking of Mayo, why is it that I don’t hear you talking about the evils of defrauding the taxpayer, which is what Mayo Clinic was adjudicated for, and what ultimately cost the “jewel” of Rochester $6.5 Million in fines from the US Dept. of Justice.  I guess maybe stealing taxpayers money that comes in the form of grants is ok with you though.  Heaven forbid you bite the hand that feeds you.

thinking out of the box on DM&E
  AMTRAC runs trains twice a day out of Chicago to Minneapolis, up through St. Cloud and on into Dakota (s) and back.  That rail line is subsidized  in part with Federal funds already.

The track is there, and it is under utilized.

That might resolve and expedite a project if it is a sound business one to begin with.  If it can deliver what it promises.

The FRA did not see that it was or that it could under its present configuration.

Cooperation — not just competition is what has built America to date.

Drop the “whole enchilada” thinking, and get on with something more realistic.

Precedent? Sometime in the nineteenth century, railroads (such as, the ancestors of the BN and UP) were given massive governmet subsidies and grants, largely to open up what was still wilderness.  Why is that justification for a massive taxpayer subsidy today?

Subsidy? Its funny you use the word subsidy.  Even GAO said that the loan does not represent a subsidy as it actually equates to a positive event on the US Budget.  Remember it was an application for a loan not a grant.  Face it, you’ve clearly got a case of Nimby going.  I don’t ever recall hearing anything from you about Austin, Texas.  Where’s your public outcry about Cleveland where the high speed rail runs within feet of one of their hospitals?  Your uproar is very transparent, and I’m sure its just a coincidence that your views are so narrowly focused.

And, as long as we’re talking about subsidies, I find it hilarious that you call out the Aggies in the states of MN and SD for being trough feeders.  Maybe you’re one of those that believes milk and beef come from “Supermarkets”.

Loan? I don’t know anything about Austin or Cleveland, so no, I didn’t (don’t) object.  I also don’t live in Rochester, so it’s not a matter of NIMBY.

Yes, DM&E has asked for a “loan,” not a “grant.”  I don’t see how you get the idea that the GAO sees this as a good thing (I welcome clarification.  I couldn’t find any such statement).  The loan is $2.3 billion, out of a total of $6 billion.  Will they be able to pay it back?  The expansion of the railroad is meant to compete with other existing carriers, not to provide new service.  Competition, as a rule, drives down prices.  This is something the GAO says is likely to happen with this route.  The rates for carying coal will decrease along the route, DM&E’s revenues will suffer . . . guess who gets stuck with the tab?

Why didn’t they just ask for a grant and be done with it?

Loan Payback I’ll answer your questions in order:

1.  I do have to provide a clarification.  The OMB has said that the RRIF program because of its Credit Risk Premium (as required by th Federal Credit Reform Act of 1990, is a “zero subsidy” loan program.  The Risk Premium is an up front payment made by the borrower in the event of default, and is calculated on the potential for loss. 

According to FRA’s website, the major change resulting from the TEA-21 amendments was that the subsidy cost could be paid by the applicant or other non-Federal infrastructure partner, in the form of a “credit risk premium,” and thus the ability of FRA to provide direct loans or loan guarantees was no longer dependent upon the receipt of an appropriation. In consideration of the credit risk premium requirement and the ability for it to be paid from non-Federal sources, the program is considered “zero-subsidy” in that the Federal Government does not have to provide appropriations for the initial subsidy cost. However, the Federal Government bears the risk of cost increases if RRIF loans perform worse than expected.

By the way, this bears the question if the feds don’t use appropriated money, and there’s no appropriation process, then how could John Thune have “earmarked” the money for DM&E.  I think you owe Thune an apology.  I’ll watch for it!!

2.Will DM&E be able to repay the loan:

In the ROD and the court case regarding the FRA’s adoption of the STB’s EIS and SEIS, and the public notice process for the 4(f) 303 statement, Joseph Boardman, Administrator, Federal Railroad Administration wrote, “STB found that the PRB Project would generate the revenue necessary to pay for the capital investments needed and would improve rail service for DM&E existing shippers.  Additionally, the project would provide increased regional rail capacity and competition; thereby enabling the PRB mines and railroads to meet the projected increased demand for PRB coal and enhancing local and regional economies.”

Remember the 4(f) statement process and the subsequent public comment period was to take comment on the ADOPTION of the STB findings.  FRA did indeed sign as a concurring agency to STB’s agreements.  Therefore Boardman did agree with the findings as stated above.

3.  New versus Existing service:  SEE ABOVE STATEMENT

4.  Competition:

This is good for everyone, especially DM&E.  Sure competition will drive down rates.  Let’s see, who would be more efficient and therefore their margins of profit would be better, even on lower rates – DM&E or an existing carrier.  If you have a newer and more efficient plant that makes widgets, and your competitor makes the same product with older less efficient systems, who will make more money if the amount of sales doesn’t change or demand actually decreases?  Duh, why do you suppose that BN and UP are in opposition?  Isn’t it Ironic that in 2001, the American Railroad Association and Robert Krebs, former BNSF President and CEO actually testified in support of this program.

As far as your question about why they didn’t ask for a grant.  Good question, but it appears to me they just wanted what the program is designed to offer rehabilitation and expansion dollars on temporary basis.  All they needed was a loan.

Oh and one other thing.  In your previous post you talk about how the precedent of large grants and loans being given to UP and BN should count in present day affairs.  Let me ask you this, does the fact that the constitution gives you the right to say and write what you want, even though I think it borders on slander sometimes, through the first amendment count as precedent in your eyes?  I wonder what you would say if someone tried to take away your ability to publicly tarnish a good man’s name, because it was a right that was given to the people of this country more than just a few years ago.

Who, me? Barry–

Thank you for your answers to my questions.  You have given me a lot to mull over on this issue.

I think you might be confusing me with someone else.  This sentence is the first time in my life I have ever typed the name “John Thune.”  I have never said anything about him and “earmarks,” so I don’t know why I would owe him an apology (I did not write the original post, if that’s what you’re thinking).

I’m also confused about your First Amendment/railroad land-grant analogy.  Are you saying that railroads have a constitutional right to government assistance?

Finally, what have I said that “borders on slander”?  Are you sure you are responding to the right person? 

My Bad I have to apologize Randy.  I just now figured out that I wasn’t speaking to Mr. Pomeroy.  My Bust.

My analogy about the 1st amendment is that it is used as precedent many times every day, as the established law under which a certain benefit is given.  The same holds true for the precedent set when the US Government did just exactly what the DM&E is asking for, only then it was for UP and BN.  You can’t have it both ways.  When UP and BN went into the PRB those were the largest loans to Railroads in history, back then.  If you add to two loans that BN used they total in excess of $1 Billion.  Every day the US Supreme Court looks at court cases and the precedent for their rulings.  The same should hold true here. 

Once again – sorry about the confusion.  I assumed that it was Mr. Pomeroy I was speaking to.  I guess he writes his columns, assassinates his characters and then moves on when he gets called on it.  That way he doesn’t have to justify his position.  Let me know if you have any other questions.

Thanks, fellas! Lively exchange. You both make great points. I enjoy reading what others have to say, especially those who disagree, for it is from them that one learns

Looking forward to it Its been my pleasure.  I’m always happy to help “Track the real Truth”.

Opinions versus fact Obviously, somewhere in the middle of your diatribes the facts have been lost.  Its clear that your intention here is to pontificate your Opinions and Speculations.  You berate the Ag Community essentially telling them they're stupid, while you have no facts to support your position.

The reality of the matter is that law is based on precedent, and I find it very interesting that you banter about the evils of the DM&E;, when in reality both the BN and UP were originally started with huge government subsidies and land grants.  The precedent to provide financing for this rail road project already exists, but I guess the NIMBY concept, when coupled with large amounts of money from Mayo Clinic has won out.

Speaking of Mayo, why is it that I don't hear you talking about the evils of defrauding the taxpayer, which is what Mayo Clinic was adjudicated for, and what ultimately cost the “jewel” of Rochester $6.5 Million in fines from the US Dept. of Justice.  I guess maybe stealing taxpayers money that comes in the form of grants is ok with you though.  Heaven forbid you bite the hand that feeds you.

thinking out of the box on DM&E;
  AMTRAC runs trains twice a day out of Chicago to Minneapolis, up through St. Cloud and on into Dakota (s) and back.  That rail line is subsidized  in part with Federal funds already.

The track is there, and it is under utilized.

That might resolve and expedite a project if it is a sound business one to begin with.  If it can deliver what it promises.

The FRA did not see that it was or that it could under its present configuration.

Cooperation — not just competition is what has built America to date.

Drop the “whole enchilada” thinking, and get on with something more realistic.

Precedent? Sometime in the nineteenth century, railroads (such as, the ancestors of the BN and UP) were given massive governmet subsidies and grants, largely to open up what was still wilderness.  Why is that justification for a massive taxpayer subsidy today?

Subsidy? Its funny you use the word subsidy.  Even GAO said that the loan does not represent a subsidy as it actually equates to a positive event on the US Budget.  Remember it was an application for a loan not a grant.  Face it, you've clearly got a case of Nimby going.  I don't ever recall hearing anything from you about Austin, Texas.  Where's your public outcry about Cleveland where the high speed rail runs within feet of one of their hospitals?  Your uproar is very transparent, and I'm sure its just a coincidence that your views are so narrowly focused.

And, as long as we're talking about subsidies, I find it hilarious that you call out the Aggies in the states of MN and SD for being trough feeders.  Maybe you're one of those that believes milk and beef come from “Supermarkets”.

Loan? I don't know anything about Austin or Cleveland, so no, I didn't (don't) object.  I also don't live in Rochester, so it's not a matter of NIMBY.

Yes, DM&E; has asked for a “loan,” not a “grant.”  I don't see how you get the idea that the GAO sees this as a good thing (I welcome clarification.  I couldn't find any such statement).  The loan is $2.3 billion, out of a total of $6 billion.  Will they be able to pay it back?  The expansion of the railroad is meant to compete with other existing carriers, not to provide new service.  Competition, as a rule, drives down prices.  This is something the GAO says is likely to happen with this route.  The rates for carying coal will decrease along the route, DM&E;'s revenues will suffer . . . guess who gets stuck with the tab?

Why didn't they just ask for a grant and be done with it?

Loan Payback I'll answer your questions in order:

1.  I do have to provide a clarification.  The OMB has said that the RRIF program because of its Credit Risk Premium (as required by th Federal Credit Reform Act of 1990, is a “zero subsidy” loan program.  The Risk Premium is an up front payment made by the borrower in the event of default, and is calculated on the potential for loss. 

According to FRA's website, the major change resulting from the TEA-21 amendments was that the subsidy cost could be paid by the applicant or other non-Federal infrastructure partner, in the form of a “credit risk premium,” and thus the ability of FRA to provide direct loans or loan guarantees was no longer dependent upon the receipt of an appropriation. In consideration of the credit risk premium requirement and the ability for it to be paid from non-Federal sources, the program is considered “zero-subsidy” in that the Federal Government does not have to provide appropriations for the initial subsidy cost. However, the Federal Government bears the risk of cost increases if RRIF loans perform worse than expected.

By the way, this bears the question if the feds don't use appropriated money, and there's no appropriation process, then how could John Thune have “earmarked” the money for DM&E.;  I think you owe Thune an apology.  I'll watch for it!!

2.Will DM&E; be able to repay the loan:

In the ROD and the court case regarding the FRA's adoption of the STB's EIS and SEIS, and the public notice process for the 4(f) 303 statement, Joseph Boardman, Administrator, Federal Railroad Administration wrote, “STB found that the PRB Project would generate the revenue necessary to pay for the capital investments needed and would improve rail service for DM&E; existing shippers.  Additionally, the project would provide increased regional rail capacity and competition; thereby enabling the PRB mines and railroads to meet the projected increased demand for PRB coal and enhancing local and regional economies.”

Remember the 4(f) statement process and the subsequent public comment period was to take comment on the ADOPTION of the STB findings.  FRA did indeed sign as a concurring agency to STB's agreements.  Therefore Boardman did agree with the findings as stated above.

3.  New versus Existing service:  SEE ABOVE STATEMENT

4.  Competition:

This is good for everyone, especially DM&E.;  Sure competition will drive down rates.  Let's see, who would be more efficient and therefore their margins of profit would be better, even on lower rates – DM&E; or an existing carrier.  If you have a newer and more efficient plant that makes widgets, and your competitor makes the same product with older less efficient systems, who will make more money if the amount of sales doesn't change or demand actually decreases?  Duh, why do you suppose that BN and UP are in opposition?  Isn't it Ironic that in 2001, the American Railroad Association and Robert Krebs, former BNSF President and CEO actually testified in support of this program.

As far as your question about why they didn't ask for a grant.  Good question, but it appears to me they just wanted what the program is designed to offer rehabilitation and expansion dollars on temporary basis.  All they needed was a loan.

Oh and one other thing.  In your previous post you talk about how the precedent of large grants and loans being given to UP and BN should count in present day affairs.  Let me ask you this, does the fact that the constitution gives you the right to say and write what you want, even though I think it borders on slander sometimes, through the first amendment count as precedent in your eyes?  I wonder what you would say if someone tried to take away your ability to publicly tarnish a good man's name, because it was a right that was given to the people of this country more than just a few years ago.

Who, me? Barry–

Thank you for your answers to my questions.  You have given me a lot to mull over on this issue.

I think you might be confusing me with someone else.  This sentence is the first time in my life I have ever typed the name “John Thune.”  I have never said anything about him and “earmarks,” so I don't know why I would owe him an apology (I did not write the original post, if that's what you're thinking).

I'm also confused about your First Amendment/railroad land-grant analogy.  Are you saying that railroads have a constitutional right to government assistance?

Finally, what have I said that “borders on slander”?  Are you sure you are responding to the right person? 

My Bad I have to apologize Randy.  I just now figured out that I wasn't speaking to Mr. Pomeroy.  My Bust.

My analogy about the 1st amendment is that it is used as precedent many times every day, as the established law under which a certain benefit is given.  The same holds true for the precedent set when the US Government did just exactly what the DM&E; is asking for, only then it was for UP and BN.  You can't have it both ways.  When UP and BN went into the PRB those were the largest loans to Railroads in history, back then.  If you add to two loans that BN used they total in excess of $1 Billion.  Every day the US Supreme Court looks at court cases and the precedent for their rulings.  The same should hold true here. 

Once again – sorry about the confusion.  I assumed that it was Mr. Pomeroy I was speaking to.  I guess he writes his columns, assassinates his characters and then moves on when he gets called on it.  That way he doesn't have to justify his position.  Let me know if you have any other questions.

Thanks, fellas! Lively exchange. You both make great points. I enjoy reading what others have to say, especially those who disagree, for it is from them that one learns

Looking forward to it Its been my pleasure.  I'm always happy to help “Track the real Truth”.