(The Huron Plainsman posted the following article by Roger Larsen on its website on February 7.)
HURON, S.D. — A legal hurdle in the proposed Dakota, Minnesota & Eastern Railroad expansion project could be averted if the company can win approval for terminal trackage rights at Owatonna, Minn., a Huron attorney and former legislator said Thursday.
The Surface Transportation Board has authorized trackage rights over the Iowa, Chicago & Eastern Railroad between Owatonna and Mason City, Iowa, even though terminal trackage rights at Owatonna were denied, Ron Volesky said.
Cedar American Rail Holdings Inc. controls the DM&E and the IC&E railroads. That control was approved by the STB last Friday.
In a briefing at the Beadle County Democratic Forum, Volesky said the STB, a three-member federal panel, has indicated it is convinced that one way or another there will be – in the not-too-distant future – a DM&E and IC&E connection at Owatonna.
If so, it would mean cargo could use existing track from Owatonna to Mason City and trains could avoid Rochester, Minn., on their way to the Mississippi River.
The city of Rochester, the Mayo Clinic and the Mid States Coalition for Progress have filed a lawsuit challenging the expansion project. That case is still pending before the Eighth Circuit Court of Appeals in St. Louis.
Volesky said the STB has denied the railroad’s application for terminal trackage rights, which would have allowed it to use 3,700 feet of Union Pacific track in Owatonna. Such trackage rights would give the railroad transfer rights so coal could move on the IC&E line to Mason City.
“It (STB) did direct the DM&E and Union Pacific to report to the board in April on the status of negotiations regarding the use of the existing connection at Owatonna,” he said.
The Rochester lawsuit seemingly is the largest legal hurdle facing the DM&E project, which involves hauling coal from the Powder River Basin in eastern Wyoming to the Mississippi River for use in power plants in the East. Agricultural and other commodities would also be shipped on the improved line.
Meanwhile, Volesky said he is confident all of the legal, financial, political and management issues can be resolved. Cedar American chief executive officer Kevin Schieffer said Wednesday he believes constructon won’t start until next year.
“The big thing right now is trying to attract a strategic partner to help with the financing,” he said.
The $2 billion project is critically important not only to the viability of Huron, but the entire state, Volesky said. Huron would have 500 new jobs if the project is built. It would also provide an improved rail line for shipping projects and a $10 million increase in revenue for education because of property taxes.
Volesky said the eminent domain issue, which DM&E recently won, is being appealed by the state, but that it should be dropped. Gov. Mike Rounds has steadfastly been a project supporter and should take the lead in withdrawing the legal challenge, he said.
The railroad expansion project is strong politically and last week’s STB approval of Cedar American control of the two railroads has enhanced the management’s position, Volesky said.
DM&E doubled its trackage rights by acquiring IC&E, he said.
The project also fits in with the national energy policy, he said. “I think the financial resources will be available in the near future,” Volesky said.
As a side issue, he said there is movement in the Legislature to once again give the railroad tax credits, which means that for every dollar in repairs it would receive a similar credit on its centrally assessed utility taxes.
The loss of the tax credit hasn’t yet hurt the railroad because there was a three-year phaseout, but that is coming to an end, he said.
The trackage rights issue at Owatonna could be a boon to the project if it goes DM&E’s way, Volesky said.”Look in the future – that could be a real sleeper of an issue that might bode well for this expansion project,” he said.