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Wednesday, September 09, 2009

DM&E will likely rise again, and conditions may be different

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The Dakota Minnesota & Eastern Railroad said last week it is suspending its planned $6 billion project to ship Wyoming coal across South Dakota and Minnesota, due to the poor economy, noted an editorial in the Madison, S.D., Daily Leader. A controversial proposal for more than a decade, the DM&E's expansion was effectively put on hold when it dropped its condemnation lawsuits against some landowners where the trains would have run.

The expansion project also included upgrading existing rail lines, much of it across South Dakota. The project had been endorsed by both Gov. Bill Janklow and Gov. Mike Rounds, as well as other public officials, but faced resistance at Brookings, Pierre and other locations. The most prominent protesters were Rochester, Minn., and the Mayo Clinic.

Many things have happened since DM&E went to work on the expansion and upgrade. The company was sold to Canadian Pacific Railway, energy prices have fluctuated wildly, train traffic has dropped because of the national recession and Congress is debating climate change legislation that could affect coal-fired power plants.

Even so, we expect the project will eventually be proposed again. The nation will emerge from the recession, and the pressure to produce power domestically will keep growing. The last remaining objection -- the environmental impact of coal plants -- is still a wild card.

Other conditions may also change, including the regulatory climate, agricultural production along the route and the emergence of alternative energy sources such as wind, solar and biomass.

DM&E may put the plans on a shelf for a while, but we'd guess they won't be thrown away.

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