(The Associated Press circulated the following article by Frederic J. Frommer on August 25.)
WASHINGTON — The Mayo Clinic and the city of Rochester launched another attack on the Dakota, Minnesota & Eastern Railroad, arguing in a federal filing Thursday that the railroad has misrepresented its financial position as it seeks a $2.3 billion federal loan for a proposed expansion.
DM&E denied the charges, and said critics were rehashing old misleading arguments.
In its filing with the Federal Railroad Administration, the Rochester Coalition argued that DM&E is undeserving of the loan because the railroad has made “numerous public statements that appear to be inaccurate or misleading representations.”
The Rochester Coalition is made up of the Mayo Clinic, Olmsted County, the city of Rochester and the Rochester Chamber of Commerce. The coalition has also called into question the railroad’s safety record.
The FRA is considering the $2.3 billion loan application that DM&E needs to move forward on the expansion. The agency says it will take public comment on the project until Oct. 10. It then has 90 days to approve or deny the loan.
“Their filing today is nothing new – it’s the same old misleading information,” said DM&E spokesman Jafar Karim. “The fact of the matter is the project is going to improve the safety of the railroad, and the economy for the region, and will help farmers and reduce energy prices.”
The Mayo Clinic, which is located in Rochester, vociferously opposes the expansion plan, saying the increased flow of trains through Rochester, at higher speeds, would increase the risk of a spill.
Glenn Forbes, CEO of Mayo-Rochester, said that it would be “tragic” if the loan put the clinic’s patients and staff in jeopardy.
Thursday’s filing points to several instances of what it calls misleading or contradictory statements made by DM&E President Kevin Schieffer.
For instance, it notes that last month, Schieffer told the Plainsman of Huron, S.D.: “The project will attract and has attracted a huge amount of private financing.”
But just a couple of days later, the Chicago Tribune reported that Schieffer explained his need for public financing: “Schieffer countered by saying his railroad has no choice but to go to the federal government because lawsuits and regulatory delays have scared off utility companies that ordinarily would sign long-term contracts for coal delivery.”
“He can’t have it both ways,” said Olmsted County Board Chairman Ken Brown.
Karim said there was no contradiction. “It’s a $6 billion project – $2.3 billion is for the upgrade of the railroad; the remaining money would be from private investment,” he said.
The coalition’s filing also cited a 2002 Minnesota Public Radio interview, in which Schieffer said, “We are a tiny little railroad, and we don’t have two nickels to rub together – to be blunt about it.”
“This is a growing railroad,” Karim said. “We’ve become bigger, larger.”
The coalition said that Schieffer’s statements call into question the railroad’s ability to pay back the loan.
“If, as DM&E now claims, its project has ‘scared off’ investors and customers, then why would FRA hand over $2.3 billion of taxpayers’ money?” it asks.
Also Thursday, Schieffer gave a speech to the Rochester Rotary Club, in which he offered to have an “open, public dialogue” with the city.
“We want to work with Rochester,” he said. “If there is a problem, we will address it reasonably and responsibly.”
The DM&E, based in Sioux Falls, S.D., wants to add track to the Powder River Basin coal fields in Wyoming and upgrade its existing line in South Dakota and Minnesota. The project would involve building about 280 miles of new track and upgrading 600 miles of existing track.