Politics and posturing determines last man standing on DM&E expansion project

DM&E locomotive
A DM&E train similar to those likely to hauling coal from Wyoming after the completion of the multi-billion dollar expansion.
MPR Photo/Mark Steil

Kevin Schieffer says the politics surrounding the DM&E railroad is a battle of the fittest.

"Endurance is worth a lot if you can see the end game," says Schieffer. "There's a huge shortage of transportation capacity and where it's going to be the most critical is in the energy world and we're going to see brown outs and black outs. It's already started to some extent," he says.

Kevin Schieffer President and CEO of DM&E railroad
Kevin Schieffer is the President and CEO of the DM&E Railroad. He's been working for 8 years to expand and upgrade the line across South Dakota and Minnesota.
MPR Photo/Cara Hetland

Schieffer hopes today's energy crisis will create support for his railroad.

Schieffer got his start in politics as an aid to a Republican U.S. Senator. It was in this position that he first learned about railroads. When officials from the Chicago and Northwestern wanted to abandon its rail line in South Dakota, Schieffer convinced officials to keep it open.

What arose was the Dakota, Minnesota and Eastern Railroad. The tracks were such a mess it took three days to haul commodities from one end of the line to the other. Federal and state loans paid to upgrade the track. Some larger railroads started to notice and offered to buy the DM&E so the line could be extended into the Wyoming coal fields called the Powder River Basin. DM&E officials thought it was a great idea with train loads full of potential and decided to adopt the plan themselves and brought Kevin Schieffer in as president.

Building a railroad takes dozens of permits and permission from landowners. Everyone wants a say in where the track should go. The promise of economic development, thousands of new jobs in nearly 60 communities along the line brought life into the project.

Lots of politicians are on board. Schieffer has a picture signed by former Senate Minority Leader Tom Daschle, giving support to DM&E. Even former South Dakota Gov. Bill Janklow says he's all for the job growth and potential the expansion brings. But Kevin Schieffer says those high profile political leaders now appear to be on the other side.

"I always said this project would create thousands of jobs, I didn't know some of the early ones would be for South Dakotan's against us," says Schieffer. "Where all of that lays out, I put in the mix of things the chips will fall where they may," he says.

DM&E track
Rail track like this, in Mankato, will carry high-speed cars filled with coal from the Powder River basin in Wyoming through South Dakota and Minnesota to the Mississippi River.
MPR Photo/Mark Steil

Janklow and Daschle are both employed by the Mayo Clinic.

The Mayo is part of a coalition in Rochester that opposes train traffic through town. After Daschle lost his re-election bid he joined Mayo's board of directors. Janklow is a former patient and is consulting on ways to keep the trains out of Rochester. Daschle and Janklow both say they still support the DM&E expansion in theory. It's not clear what roles they are playing for Rochester behind the scenes. Neither would comment for this story. South Dakota Sen. John Thune defeated Tom Daschle in the 2004 election. Thune worked as a lobbyist when he wasn't in public office and the DM&E was one of his largest clients. After he was elected to the U.S. Senate, Thune added a provision in the transportation bill that could fund the $2.5 billion dollar project. Some see the ease and secrecy behind the amendment added to the bill as a reward among Republicans for defeating Daschle.

Thune has taken some heat; especially from Minnesota U.S. Sen. Mark Dayton. Dayton who's a Democrat, wants Minnesota's Republican delegation to help him keep DM&E out of Rochester.

"Tell one businessman he's not going to ramrod a project through a vital sector of Minnesota. I've done about all I can do here, I've got about eight months left and I'm in the minority caucus and I'm not close to the administration," says Dayton.

Republicans are careful when talking about DM&E. They recognize the economic development opportunities for some of the smaller towns along the line.

Glen Forbes
Dr. Glen Forbes is CEO of Mayo Clinic. He says the DM&E proposal is a case of a proposed business putting an established business at risk.
MPR Photo/Sea Stachura

Don Dahlin, USD Political Science Professor, says if it's a battle between Thune and Dayton then DM&E supporters shouldn't worry because it takes too long for congress to pass legislation.

"That is where I think Sen. Thune's prominence would make it highly unlikely that anything legislatively at the national level would pass," says Dahlin. "It seems to me the big hurdles are getting this loan. Funding this thing is a huge issue. Then there is the question of how much more can the opponents tie this up in the courts," he says.

Dahlin says opponents have done a good job delaying the project. It's been eight years of court fights and environmental debate before the federal government. Delays have driven up the cost of the project but it's also given Kevin Schieffer time to find support. Currently Rochester is the only city on the line that hasn't come to an agreement with the DM&E. Opponents are running out of options. There are only a few issues left to battle in court. The project received final federal approval earlier this year. The only real question - where will the money come from?

That's what the Rochester coalition is focusing on. They want to block a loan from the federal government for the railroad expansion. The Federal Railroad Authority is supposed to be immune to political pressure. But it won't stop some from trying.

Mayo Clinic CEO Dr. Glenn Forbes says they're trying to figure out why funding for this project shouldn't come from private investors.

"I don't hear of any other businesses of this size who has access to such an enormous amount of tax payers money for these types of issues and just understand more about the process and what happens there." says Forbes.

The Rochester Coalition is urging tax payers to get involved and oppose the federal loan. A study they commissioned says the DM&E won't be able to repay it. DM&E President Kevin Schieffer calls the report false.

When it comes to financing though, Schieffer keeps the details to himself. DM&E is a private company - the books aren't public. Schieffer fears giving away too much information to competitors. Some analysts predict if the DM&E gets the federal loan it'll be a railroad ripe for a take over. But Schieffer says he's put too much of himself into the DM&E and in the end, he wants to be the last man standing.