(The following article by Terry Woster was posted on the Sioux Falls Argus Leader website on May 12.)
PIERRE, S.D. — Two Sioux Falls-area lawmakers say the Legislature should have been consulted before a big chunk of state-owned railroad line was sold to BNSF Railway Co.
But a Republican Senate leader said he isn’t concerned about the sale, and a Canton lawmaker with experience on the State Rail Authority Board said the Legislature was involved in the purchase of rail lines in 1980 only because money was needed to close the deal.
Then-Gov. Bill Janklow persuaded legislators to temporarily raise the state sales tax in 1980 to buy a core rail line from The Milwaukee Road at a time when railroad companies were abandoning track across South Dakota.In late April, Gov. Mike Rounds said the state had struck a deal to sell much of that core track to BNSF Railway. The sale is subject to approval by the federal Surface Transportation Board.
Sens. Clarence Kooistra, R-Garretson, and Gil Koetzle, D-Sioux Falls, each said Wednesday that the Legislature should have been consulted.”It is crucial that the Legislature, who represents the citizens of this state and who gave approval of the original purchase, play a key role in selling the railway,” Kooistra said in a written statement.
“Clarence is right on,” Koetzle said. “At the very least, we should have addressed whether we wanted it sold.”
Rounds said in a prepared statement late last month that the $41.6 million sales agreement gives BNSF Railway the core line and improves rail access to markets for South Dakota shippers and producers of farm products.The governor’s statement described the core line being sold as 368 miles running from Aberdeen to Mitchell, Mitchell to Canton, Canton to Sioux Falls and Mitchell to Sioux City, Iowa.
It said the state and BNSF agreed in 1981 that the company would provide rail service on the core line for five years. In 1986, the state agreed to let the company buy the core line.Senate Republican Leader Eric Bogue of Faith said he hadn’t heard complaints from legislators about the sale and hadn’t questioned it himself.
Bogue said it was his experience with Rounds and Janklow that “when they engage in any substantial transaction like that, they have some pretty competent legal advice, both internally and under private retainer. If there were a problem with that, counsel would have found it.”
Sen. Mike Broderick, R-Canton, served eight years on the state Transportation Commission and seven on the railroad board. He said the state had the authority to sell the rail line without legislative oversight.”The Legislature was involved in that in 1980 because we needed the money to do the trick,” Broderick said. “I think Janklow did the right thing at the right time there. To sell the lines doesn’t take legislative approval.”
Broderick said he wasn’t upset about the sale.”I thought it sounded like a great deal,” he said. “We make some money, put it in the trust fund and use that to improve rail properties.”
Kooistra said even if there was no legal requirement for legislators to sign off on the deal, it still should have been consulted.
“We’re talking about a state asset, and it bothers me that we weren’t at the table when it was decided,” he said. “I’m not sure what can be done, but I do think we need to explore things further, especially how that $41 million is eventually spent.”Broderick said tapping the purchase money that goes to the Railroad Trust Fund for county and school needs, as Kooistra has suggested, isn’t possible.
“The trust fund must be used to enhance other rail properties or as loans to private railroad groups for improvements,” he said.Bruce Lindholm of the state Transportation Department said there is a relatively broad range of uses for trust fund money, but those purposes must be related to improvements in rail infrastructure or rail transportation.
Money from the trust fund has been lent to regional rail authorities for such things as building side tracks, Lindholm said. The state also has used the trust fund to finance improvements on the rail property it still owns, he said.