The railroad that could

A Union Pacific freight train's lead engine passes over a grade crossing beyond flashing lights on a safety gate

TEXT OF STORY

MARK AUSTIN THOMAS: Remember that children's book, "The Little Engine That Could?" I think I can, I think I can. Well consider the Dakota, Minnesota and Eastern Railroad. Doesn't exactly have the ring of Union Pacific. But Curt Nickisch says that the South Dakota-based line wants to build the largest rail project in the U-S since the Civil War.


CURT NICKISCH: It would have been easier in the 1860s. Dakota, Minnesota and Eastern Railroad CEO Kevin Schieffer says back then, Washington gave rail companies land, timber and rock to build new line.
KEVIN SCHIEFFER: And then they gave the railroad a bonus - a cash bonus if they got it sooner then they wanted to get it done! I miss Abraham Lincoln something fierce.

Today, Schieffer did the best he could with the Party of Lincoln. Republican Senator John Thune, a former lobbyist for the railroad, moved a decimal point in last year's transportation bill. A $3.5 billion loan program became $35 billion. More than enough for Dakota Minnesota and Eastern, or DM&E, to ask Uncle Sam to finance its track dreams.

DM&E has asked for $2.5 billion to build hundreds of miles of new line into Wyoming's Powder River Basin, home to some of the nation's cleanest-burning coal. Then trains like this one would haul it across the great plains to power plants in the East.

Senator Thune says the country needs the project.

SENATOR THUNE: We have unlimited - literally - repositories of reserves in the Powder River Basin that can help meet the energy needs of America for literally decades and decades to come.

DM&E's loan application is pending. But the White House is against it. Some call it foolish to lend $2.5 billion to a private company worth a tiny fraction of that.

KEN BROWN: And frankly the taxpayers should be outraged.

Ken Brown is a commissioner of a Minnesota county those coal trains would bisect.

BROWN: $2.5 billion is larger than the Lockhead and Chrysler bailout combined. How does the taxpayer get paid back on this loan?

Railroad industry analyst Anthony Hatch says the market for hauling coal is promising. But he says two major rail carriers already service the Powder River Basin. Both recently announced $100 million investments to expand capacity. Hatch says federal loan officials need to answer some tough questions:

ANTHONY HATCH: They decided in 1866 or whatever that there was a need for a transcontinental railroad and it certainly paid off. And they're booming again now in this railroad renaissance. The question is, are the existing, incumbent carriers doing a good enough job? Are their enormous expenditures enough? Or is there a need for development of another line at this great cost?

Answering those questions may determine whether the litlle railroad that thinks it can, will become the little railroad that could.

In Sioux Falls, South Dakota, I'm Curt Nickisch, for Marketplace.

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