(The following article by Tim Jones was posted on the Chicago Tribune website on July 10.)
ROCHESTER, Minn. — The biggest railroad expansion in modern American history is so controversial that a U.S. senator has threatened to throw himself on the tracks to stop it. The proposal has produced enough legal and regulatory filings to insulate a house and–if it’s approved–will involve what may be the largest government loan ever handed to a private company, $2.5 billion.
And right now, in a situation that 19th Century railroad barons never could have imagined, the plan is being held up by a bunch of well-scrubbed doctors in white coats at the Mayo Clinic.
The long and rancorous fight over the ambitions of a railroad that most people have never heard of–the Dakota, Minnesota & Eastern–is rooted in the Midwest’s voracious demand for coal to fuel electrical generating plants. Two railroads–the Burlington Northern Santa Fe and the Union Pacific–currently haul coal from Wyoming’s mother lode of fossil fuel, the Powder River Basin.
The South Dakota-based DM&E, an upstart cobbled together from abandoned railroad tracks in the 1980s, wants to be the third hauler. But making that happen has proved troublesome: The plan is mired in an extraordinary legal, regulatory and political thicket.
The battle for coal and who is going to deliver it is a fight nearly a decade in the making, and there is no clear end in sight. The public fisticuffs are centered in Rochester, the southeastern Minnesota home of the world-renowned Mayo Clinic and where–for now–the would-be rail expansion has been stopped in its tracks.
The line has run through the city for generations in peaceful co-existence with the clinic. But DM&E’s plan to upgrade track to allow more trains to travel faster there is vehemently opposed by powerful parties.
“The railroad will enter Rochester over my dead body,” vowed Sen. Mark Dayton (D-Minn.).
Dr. Glenn Forbes, chief executive officer of Mayo Clinic Rochester, was more measured but no less critical in his opposition.
“I see our patients threatened,” Forbes said, arguing he would not be able to guarantee the safety of thousands of patients and employees if rapidly moving trains carrying coal, fuel and other potentially hazardous materials through downtown Rochester, within hundreds of yards of the sprawling medical facility, were to derail.
Mayo is a research jewel and a unique medical facility serving the world and is due special consideration, Mayo and Rochester area officials say. To them, the solution is this: Reroute the train line far away from the clinic.
Rochester is the only community among 56 along the rail line that is objecting to the trains running through it. And the route is a crucial link to deliver much-needed coal to the Midwest, argues DM&E’s chief executive, Kevin Schieffer.
He noted that government agencies have addressed most environmental and safety concerns and recently cleared the way for the rail expansion. Lawsuits have prolonged matters, creating uncertainty among investors. Schieffer said that’s why the company is going to the government for a loan.
“This boils down to Mayo saying, `We’re special and powerful and have lots of political clout,'” Schieffer said.
Clout vs. clout
There is clout on both sides. Sen. John Thune, the South Dakota Republican who was a lobbyist for DM&E before his election to the Senate in 2004, is championing the railroad’s cause in Washington. Former Senate Minority Leader Tom Daschle (D-S.D.), whom Thune defeated in that election, is opposing the expansion. Daschle, who has considered running for the Democratic presidential nomination in 2008, now sits on the Mayo board of directors.
The fight became personal during the spring when Dayton said the Mayo Clinic is worth more than the entire state of South Dakota. If Rochester’s concerns are not addressed, said members of the Minnesota congressional delegation, they will lobby against the loan.
The private and much quieter backdrop to this battle is in Washington, where bureaucrats ultimately will decide whether DM&E will obtain financing to expand and upgrade the rail line. The issue before the Federal Railroad Administration, a close-to-the-vest agency that operates a loan program for railroads, is whether DM&E should receive a $2.5 billion loan.
The railroad plans to use part of the money to build about 260 miles of new track from the Powder River Basin, separate from those currently used by Union Pacific and BNSF. The new track would extend to the western border of South Dakota, where it would connect with existing DM&E rails, heading east to Chicago. The remainder of the money would be used to improve other track, including in Rochester.
“There is an enormous amount of demand for coal today, and two carriers can’t take it out fast enough,” said Keith Hartwell, a Washington lobbyist for the American Short Line and Regional Railroad Association and a supporter of the DM&E plan.
Pointing to what amount to traffic jams on the lines, Hartwell argued that new tracks are needed to satisfy booming demand from utility companies. “As a matter of national policy, the more coal they can haul out of there, the better off we are,” he said.
Objections to loan
Government loans or other forms of subsidies to railroads are not unprecedented, but this one would be the largest. That has raised questions.
“The pregnant question is why the DM&E should be an island of socialism in a sea of railroad capitalism,” said Frank Wilner, former chief of staff to the vice chairman of the U.S. Surface Transportation Board and now editor of the Journal of Transportation Law, Logistics & Policy.
Not surprisingly, BNSF has signaled its opposition to the loan. In January, BNSF’s chief executive, Matt Rose, said the loan “would be very, very bad public policy.”
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. Schieffer said his plan is to begin construction of new tracks next year.
That will depend on the Federal Railroad Administration, which is conducting an environmental review of the railroad’s application, in addition to an analysis of the company’s finances.
“We’re looking at the business case, much like a bank would,” FRA agency spokesman Steve Kulm said.
No one will venture a guess as to when the fight, which already has taken longer than the building of the nation’s first transcontinental railroad in the 1860s, will be settled.