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Coal line closer

01 Mar 2006

AFTER EIGHT years of vigorous lobbying, the Dakota, Minnesota & Eastern Railroad received 'final approval' from the US Surface Transportation Board on February 15 for its ambitious plan to build a 450 km extension into Wyoming's lucrative Powder River Basin coalfields.

The STB approved the scheme in 2002 (RG 3.02 p113) but the project became mired in legal challenges, notably from communities along DM&E's 965 km route through South Dakota and Minnesota which would have to be upgraded to carry 100 million tonnes of coal a year to electricity generators in the Midwest and Great Lakes regions.

The court upheld the STB's original decision, but instructed it to give further consideration to environmental issues, particularly horn noise and vibration. The final go-ahead includes conditions to mitigate 147 specified environmental impacts. STB ruled the project had 'demonstrated transportation benefits and would further the public interest.'

Nevertheless, the start of construction could still be a long way off. DM&E President & CEO Kevin Schieffer is hoping to obtain a $2·5bn low-interest loan from the FRA's Railroad Rehabilitation & Improvement Financing Programme, using a clause inserted into the recent Safetea-LU legislation by South Dakota's senators. This would be more than 10 times the size of any Rrifp loan ever granted.

President Bush's 2007 budget proposal is looking to overturn the provision, although the two senators say they will make certain that funding for the project is included in the final budget passed by Congress. The next step is for FRA to complete its own environmental review, after which it will have 90 days to approve or decline the loan application.