(The Associated Press circulated the following article on July 5.)
DUBUQUE, Iowa — On a hot June morning, Kevin Schieffer issued a warning as a pack of big birds flew in to perch on a newly rebuilt stretch of railroad tracks in Dubuque, Iowa, next to the Mississippi River.
“Better be careful, guys,” said the railroad executive, surveying the new tracks in his company’s high-rail pickup. “We don’t slow down too much for buzzards.”
The vehicle braked slightly, and the birds flew away.
Bigger obstacles aren’t moving quite as easily for Schieffer, who’s trying over the objections of the Mayo Clinic, Sen. Mark Dayton and others to close the deal on a years-long quest to build a 1,000-mile Midwestern railroad line. To pull it off, Schieffer is trying to persuade the Federal Railroad Administration to give him a $2.5 billion loan for the project, among the largest in history.
If it succeeds, the project could be a boon to farmers — and Schieffer.
The project would cut transportation costs for coal, corn and ethanol and make Schieffer what Fortune Magazine calls “America’s first self-made railroad baron since the days of Teddy Roosevelt.”
It also would be over the protests of people who consider Schieffer a master manipulator of political connections and someone whose dealing can’t be trusted.
Schieffer has been patient. He’s now the 48-year-old president and chief executive officer of the Sioux Falls, S.D.-based Dakota, Minnesota & Eastern, or DM&E, Railroad, but the rail line has been on his mind since he was a 25-year-old junior staffer on Capitol Hill.
He has attended at least a thousand public meetings, meeting with hundreds of landowners and city officials.
On this day, Schieffer is pitching once again, boarding his chartered plane in Sioux Falls well before sunrise. He met with employees and inspected new track at a quick stop in Dubuque, Iowa, and then flew to LaCrosse, Wis., for a speech.
“There hasn’t been a railroad built in this country in over a hundred years,” he told an audience at the annual meeting of the Dairyland Power Cooperative.
Schieffer’s biggest roadblock might be the Mayo, which with the help of some famous South Dakotans and Dayton is trying to block the plan to run coal trains through Rochester. But Schieffer said he won’t bow to Mayo’s pressure.
“It’s all about political swag. … If I start bending to that, this whole thing is going to unravel up and down the line,” he said.
Schieffer, a former U.S. attorney from South Dakota and ex-chief of staff to former Republican Sen. Larry Pressler, recalled getting the call in 1983, when an executive from the Chicago & North Western railroad phoned Pressler’s office with news that the company planned to go to the ICC to request an abandonment.
“I didn’t know too much about anything. I had about 5,000 questions … What the hell’s the ICC? And what’s an abandonment?”
After doing some research, Schieffer got his boss to oppose the plan to abandon the line, and the ICC — the Interstate Commerce Commission — agreed. It was the beginning of DM&E, created in 1986 to serve shippers in southern Minnesota and South Dakota. In 2002, DM&E was joined by the Iowa, Chicago & Eastern, and the combined railroads have more than 2,500 miles of track and about 1,000 employees.
Schieffer, a divorced father of a 16-year-old girl, was the ninth in a family of 12 children, born in a Nebraska farmhouse without plumbing. He grew up milking cows and got to know South Dakota well because his family’s farm was on the Nebraska-South Dakota border. “If we went to the big city, it was Yankton.”
In 1991, at Pressler’s urging, President Bush appointed Schieffer U.S. attorney. In 1993, President Clinton named a successor, and Schieffer went to work in private practice and eventually started representing DM&E, which led to his current job. Schieffer said his new railroad line would allow the Midwest to tap “the holy grail of the energy world,” tons and tons of coal buried in Wyoming’s Powder River Basin. Schieffer figures he could haul the coal to the Mississippi River — if he can first get the money to build 260 miles of new track in South Dakota and Wyoming and then patch up a few hundred miles of old track that extends east through South Dakota and Minnesota.
The FRA, which oversees U.S. railways, is expected to make a decision soon. Schieffer hopes to begin construction next year and have the new line up and running in 2009.
Schieffer called his project the perfect hat trick: hauling corn to the ethanol plants, bringing in the coal to fire them, leaving with the ethanol.
Over the years, Schieffer has created his share of enemies, but even some of his most severe critics say his smarts, political connections and dogged persistence have put him in a position to hold sway.
Dayton, D-Minn, one of Schieffer’s biggest opponents, said Schieffer is out to “ram it right down” the throats of opponents in Rochester, Minn.
Schieffer said he has negotiated agreements with 70 of the 110 landowners on the rail line. Paul Jensen, a rancher in Wasta, S.D., called Schieffer “a spinmaster” and said that nearly 90 percent of landowners oppose the project. “He’s talking about using eminent domain out here and just wiping out 110 or 120 farms and ranches,” said Jensen.
Schieffer got help from an old friend, someone he admired as a South Dakota basketball legend years ago: Republican Sen. John Thune.
Despite opposition from the White House, Thune helped persuade Congress last year to increase the amount of the program from $3.5 billion to $35 billion. Thune, who received campaign contributions from Schieffer and who earned $220,000 as DM&E’s chief lobbyist in the 18 months before joining the Senate, is promoting the project to lure jobs. The law would allow Schieffer to not put down any collateral and not make payments for up to six years. Dayton and other critics fear taxpayers would be on the hook if the project fails.
Schieffer said he has more supporters than opponents. He was warmly welcomed by the Dairyland audience in La Crosse. William Berg, the head of Dairyland, told the crowd that the DM&E project will open up competition “and help drive a stake into the heart of the current abusive pricing tactics” in the railroad industry.
Schieffer told the co-op members that big projects are always controversial and his is no exception, but he said there’s a children’s book that he relates to a lot.
It’s called “The Little Engine That Could.”