(The following article by Mark Fischenich was posted on the Mankato Free Press website on February 16.)
MANKATO, Minn. — The federal government — after eight years of studying a South Dakota railroad’s ambitious and controversial plan to expand into the coal fields of Wyoming — has given final permission to build the massive project.
“Today, we approve the construction by the Dakota, Minnesota & Eastern Railroad Corporation (DM&E) of a 280-mile rail line to reach the Powder River Basin (PRB) in Wyoming,” stated the Surface Transportation Board in the decision released Wednesday. “… The DM&E project has significant transportation benefits and would further the public interest.”
The final ruling by the STB comes with no significant new conditions on the DM&E, meaning Mankato would be largely on its own in dealing with the impact of up to 34 additional trains rolling through the city daily.
“The Surface Transportation Board decision was disappointing but not unexpected,” said U.S. Sen. Mark Dayton, the most vocal opponent of the project among the Minnesota congressional delegation.
DM&E officials were thrilled.
“This is a great day for DM&E,” said Kevin Schieffer, the railroad’s president and chief executive officer, in a written statement. “It’s been a long time coming, but we are pleased with the end result. … The STB’s decision today affirms the project’s overwhelming public benefits.”
Dayton said the only hope for opponents of the project is that federal officials will refuse the railroad’s effort to obtain a federal loan to cover the construction costs.
“We’ll have to see if some level of sanity is going to prevail,” said Dayton, who called the federal loan application “outrageous.”
Financing is now the last obstacle between the DM&E and the start of construction, which railroad officials still hope can begin this summer. The Federal Railroad Administration is in the process of considering the application from the DM&E for a $2.5 billion low-interest government loan.
Thursday’s decision ended any hope by Mankato officials for federally mandated relief for local impacts of greatly increased train traffic.
If the project sticks to the current railroad corridor near the Minnesota River in Mankato, the primary requirement placed on the railroad is fencing where the rail line runs through local parks.
The current in-city route is preferred by the Sioux Falls-based railroad, but the STB gives the DM&E authority to construct a southern bypass around Mankato if necessary. Several additional conditions are in place for that route, mainly dealing with crossings of rural roads south of town.
Mankato Mayor John Brady said City Manager Pat Hentges and some members of the City Council will have a discussion with Schieffer in Sioux Falls later this month.
“Where that discussion goes, nobody can predict,” Brady said. “But I think we need to talk to them because there’s some very serious considerations that Mankato has before it.”
Some of the major concerns are noise associated with train whistles in residential areas and downtown, safety concerns where the tracks intersect with streets and the impact on parks and trails.
The city at one time had an agreement with the DM&E where the railroad would provide an estimated $25 million in mitigation. A divided city council later withdrew from the agreement in hopes that the withdrawal might undermine the prospects of the in-city route being constructed.
Brady said city officials should now begin looking for other sources of financial assistance to deal with some of the impacts, including seeking help from state and federal lawmakers.
Dayton said he’s uncertain what he and other lawmakers can do at this point. He hopes Federal Railroad Administration officials reviewing the DM&E loan conclude that the railroad’s business plan doesn’t add up and reject the application.
“This is beyond a white elephant, it’s a white dinosaur,” Dayton said of the DM&E’s plan to haul up to 100 million tons of coal a year to utilities in Midwestern and Great Lakes states.
He described the railroad as a “fly-by-night operation with good political connections” — a reference to Sen. John Thune, a former DM&E lobbyist, who quietly altered federal law to expand and tailor the FRA loan program to fit the DM&E’s needs.
Thune also added a 90-day deadline for the FRA to make a ruling on the $2.5 billion loan, which is more than 10 times larger than any loan the FRA has ever dealt with. That clock won’t start ticking with Thursday’s announcement, however, because there’s a 30-day waiting period before the STB decision becomes official.
The 90-day limit also won’t begin until after the FRA completes an environmental review of the project or decides to use the already completed environmental study conducted by the STB.