The Free Press, Mankato, MN

Local News

December 3, 2012

Update: DM&E axes coal shipping project

(Continued)

MANKATO —

The Canadian Pacific bought the South Dakota-based DM&E and its subsidiaries later in 2007 for $1.5 billion. Included in the sale were DM&E’s equipment, 2,500 miles of track and the option to expand into the Wyoming coal fields to compete with the Union Pacific and BNSF Railway, which in 2006 had carried about 450 million tons of coal from the basin.

The CP’s purchase of the line provided the financial clout to finally implement the coal-train project, but railroads have been dealing with weaker coal demand because of low natural gas prices. There also is speculation that any new regulations to limit greenhouse gases would make coal even less attractive to utilities.

Wyoming is the nation’s leading coal-producing state, though the state is projecting essentially flat revenues in coming years. Wyoming’s in-house state fiscal analysts in October projected that coal production in the state is on pace to decline 8.7 percent, or about 40 million tons, in 2012.

While the DM&E’s coal project was mainly aimed at serving power plants in the Midwest and eastern United States, it was broadly supported by many farm groups and communities along the route. Along with laying new track into Wyoming, the project would have upgraded the existing line stretching across South Dakota and southern Minnesota — potentially improving rail service for farmers and shippers.

But opposition was strong in Mankato and Rochester, with the Mayo Clinic’s objections getting particular notice from Minnesota’s congressional delegation. That was reflected in Congressman Tim Walz’s statement Monday regarding the CP’s decision.

“This announcement is welcome news and is important for the safety of those who work or receive care in downtown Rochester,” stated Walz, DFL-Mankato. “While this project didn’t make sense, we must continue to look for new, innovative ways rail — particularly high-speed rail — can  work to expand Rochester’s economy, create jobs, and position southern Minnesota as a leader in the 21st century.”

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