The Railroad and South Dakota
To say the issue of rail roads in South Dakota is a complex subject is an understatement. It is an issue that our policy makers will have to address sooner or later (hopefully sooner) The railroad is supposed to be a public-private partnership. While serving our communities, by providing an inexpensive means of getting farm and other products to market; railroading companies also should be able make a profit. There are lot questions about railroading’s future in South Dakota. There are no easy answers, no silver bullets and no quick fixes. It is going to come right down to making some hard decisions, and suffering the consequences of those decisions.
In the past few years, there have been several news articles about high speed rail from Los Angeles to San Francisco,(The Hyperloop) and one from Victorville to Las Vegas and the federal government support for these projects. Meanwhile here in the Rushmore state, there are areas struggling to keep what rail service they do have. The railroad is slowly disappearing, and no one seems to notice, or if anyone does, they just don’t care.
A bit of History.
Okay, I know, it’s not exactly my favorite subject either. However, it helps understand some the issues.
Back in 1889, When South Dakota became a state, there was just under 900 miles of track.
In 1948, when the last track was laid, there was well over 4,000 miles of steel. Rail was essential for many of the smaller towns. They brought people, freight and ‘stuff’ to many smaller towns, They also took grain, livestock and other products to market. In the years that followed, highways had improved, and airplanes could move people in hours what used to take days on rail. The railroads shifted from passenger service to moving freight. The only passenger service offered was that which was require by law at the time.
During the 1970’s There were some major changes in railroading industry; Amtrak was formed and took over much of the passenger rail service. Many of the smaller railroad companies went bankrupt or were absorb by larger companies. Conrail was formed to help some of struggling freight lines on the east coast. Both Amtrak and Conrail were products of the federal government. Up until this point, the federal government had the railroad companies under its thumb, through over regulation and mandates, almost killing the industry as a whole. In 1980 the Staggers Rail Act was passed by congress, which for the most part deregulated the railroad companies. It allowed the railroads to reorganize, drop sparsely used lines, and return to profitability.
During The 1980’s Milwaukee Road embargo, South Dakota was faced with a loss of over ½ of it’s operational track. South Dakota Department of Transportation (DOT) evaluated every segment of track. Those lines that were deemed essential to the state’s economy, the state moved to find other companies to buy and operate those lines, where no buyer was found the state bought the line and ‘banked’ it for future use. It was out this plan that Dakota Minnesota & Eastern was born. Many smaller towns lost rail service. South Dakota came up with a State Highway Plan. In this plan, towns without rail service would be able to truck grain to towns that did. The SD DOT beefed up those highways with wider shoulders, wider turning radius, etc. to handle the increase truck traffic.
Today there is a mere 1,840 miles of operational rail line in South Dakota. The state still owns about 316 miles of the operational track. Of the 15 Railroad companies that once served South Dakota, there are now nine.
How Important is Railroads to South Dakota?
In 2012 South Dakota farmers produced well over 800 million bushels of corn, soybeans and other grains. About 55% of that is exported on rail, according to United States Department of Agriculture (USDA) estimates. (I got this info before the site went dark)
From Governor Dennis Daugaard’s column Sept. 6, 2013
In part, the success of South Dakota’s agricultural development is owed to the industry’s ability to ship products to and from South Dakota via rail. Rail service allows South Dakota products to enter regional and global markets. When our products are shipped by rail, it saves money for producers and consumers. In order to keep the price of our products competitive, the shipping costs need to be competitive as well.
One important rail line in South Dakota is the old DM&E line, now owned by the Canadian Pacific. The line runs through many South Dakota cities and towns including Belle Fourche, Sturgis, Rapid City, Wall, Phillip, Midland, Pierre, Onida, Aberdeen, Huron, Watertown and Brookings. Around 80 to 90 million bushels of grain are shipped each year across the state on the Canadian Pacific rail line.
The American Association of Railroads has published a report indicating how much was exported and imported in and out of South Dakota.The Association of American Railroads estimates it would take 7,200,000 additional trucks to move this amount of freight over the road. This doesn’t include any freight delivered intrastate.
They also published this report The interesting stuff is on page three.
This is across the seven class I railroads, nationwide. As you can see, the of bulk of their freight and income is from coal. Agricultural products only make up just under 8% of the products shipped providing 7.8% of the total revenue. While the loss of Agricultural products would hurt, it is something the railroads could recover from.
“Not in My Backyard!”
Regardless how important rail is to South Dakota #1 industry there seems to be some very intense feelings against railroads and trains. The primary complaints are safety, noise and vibration, and they seem to scare people.
I like trains, really, just not real trains. They scare me.
-Kristine Webber, Sioux Falls Resident
Any time a railroad talks about expanding, or moving, sometimes within hours hours of the announcement, grass roots groups are formed to stop whatever the railroad is expanding.
When Burlington Northern / Santa Fe was trying to move the Sioux Falls rail-yard to an area out side of town every site had people against it. They were saying, “Yes, move it, just not here.” When there was talking of adding a siding so locomotives can move to either end of the train, a lot of people showed up to up to oppose it. It seemed to them the best option was to leave the switch yard right where it’s at. Read that here
When Dakota Minnesota and Eastern was planning to expand their lines into the Wyoming’s Powder River Basin and start shipping coal to customers eastward, they realized they needed to upgrade their current rails to handle the weight, length and speed of the coal trains. Despite the obvious benefits, communities all along the line resisted. The Mayo Clinic in Rochester MN hired then former Congressman and Governor Bill Janklow as consultant to oppose the expansion. DM&E tried to work with many of the communities to allow the up grades to the existing rails for the coal trains, yet these grass roots groups still opposed any expansion, upgrades and some extreme cases they wanted the existing rails to be removed.
Back to the Sioux Falls rail yard. From the Sioux Falls Web site.
The Rail Yard Redevelopment Project is moving forward. A key milestone in the project was reached last week when the draft Environmental Assessment and Section 4(f) Evaluation document was signed by state and federal officials.
“This is an exciting time for Sioux Falls when a large project like this is one step closer,” says Mark Cotter, Director of Public Works. “Our goal is that the City’s purchase of the rail yard from BNSF will be complete by the end of the year.”
The downtown rail yard occupies an area of Sioux Falls that has been identified as a central location for economic redevelopment. The purpose of the Rail Yard Redevelopment Project is to remove the yard tracks, while maintaining BNSF’s railroad operations, meeting applicable railroad design criteria and safety standards, and being feasible from an engineering and logistics standpoint.
The removal of the yard tracks will open up approximately ten acres of land downtown for future development. If the proposed alternative is approved, trains still will travel through the heart of Sioux Falls but will interchange in the northeast part of town instead.
It would seem before the ink was dry, that Sioux Falls was almost dancing the streets in joy over the removal of the rail-yard. To be fair, several Sioux Falls in town businesses will still serviced by rail, The city just gets the rail yard moved so they can develop that area of downtown.
The Rail way vs. The Highway
The result has been increasing highway congestion. The Texas Transportation Institute reports that over the decade between 1993 and 2003, the cost of highway congestion in the nation’s urban areas increased from $39.4 billion to $63.1 billion, an increase of 60.2 percent. The U.S. DOT estimates that the cost of congestion across all modes of transportation could be three times as high—approaching $200 billion per year—if productivity losses, costs associated with cargo delays, and other economic impacts are included. These include losses accruing to auto drivers, freight carriers, businesses, consumers, and the general public. As the cost of highway congestion has increased, public policy-makers at all levels of government have started looking to the railroads to carry more freight to relieve truck and highway congestion, and to help conserve energy, reduce engine emissions, and improve safety. Shippers, too, have started looking to railroads to carry more longer-distance shipments, especially as the costs of truck fuel and labor have increased.
It is in this report here.
(warning: it is a LOT of really dry reading)
Now, out of The South Dakota Department of Transportation fact book
It also might be worth noting that a lion’s share of the bridges and box culverts in the state are quickly reaching end of life.
If we add an additional 7,200,000 trucks with over 28 million tons of freight, our roads are going to take a severe beating.
Because railroad companies own their rail, the cost to lay and maintain rail is consider proprietary, and are rather unwilling to share it with me. The numbers I have found generally indicate the cost to install new rail ranges from 500,000 per mile to 49,100,000,000 per mile, depending on the obstacles and the location. Maintenance costs is some where between $1,000 and $500,000 per mile per year, again depending on the location and current condition of the track itself. That doesn’t mean they are going to spend that much each year, just an average cost. Keep in mind the railroad is suppose to cover all these costs, and not rely on any tax revenue.
Wow! that is a lot to digest there. Here is some more to chew on.
According to the Burlington Northern Santa Fe press releases via their web site,
over the past two years they have committed over 8,000,000,000 to their capital improvement program. That sounds fantastic, or does it?
BNSF plans $61 million capital program in Iowa to maintain and expand rail capacity
BNSF Plans $86 Million Capital Program in North Dakota to Maintain and Expand Rail Capacity
BNSF Plans $100 Million Capital Program in Minnesota to Maintain and Expand Rail Capacity
BNSF plans $202 million capital program in Nebraska to maintain and expand rail capacity
BNSF Plans $60 Million Capital Program in Wyoming to Maintain and Improve Rail Capacity
BNSF Plans $30 Million Capital Program in South Dakota to Maintain and Expand Rail Capacity
They will make that up the next year, right?
BNSF Plans $95 Million Capital Program in Minnesota to Improve and Expand Rail Capacity
BNSF Plans $110 Million Capital Program in Nebraska to Improve and Expand Rail Capacity
BNSF Plans $220 Million Capital Program in North Dakota to Improve and Expand Rail Capacity
There is still some time left for this year.
Burlington Northern/Santa Fe did not respond to any questions either by E-mail or by phone. They just responded with various links.
So much for Burlington Northern / Santa Fe Let’s move on to Canadian Pacific, which owns and operates the only East-West rail way in the state-
When Canadian Pacific bought out Dakota Minnesota & Eastern in October 2008, They were all set to continue the Dakota Minnesota & Eastern plans for upgrading and expansion into Power River Basin.
From Christine Brown at Canadian Pacific:
In December, 2012, Canadian Pacific announced to defer indefinitely plans to extend its rail network into the Powder River Basin coal mines. There has been no change in this decision.
Here is that press release:
On August 8th The Governor’s releases this statement
“I am asking the Surface Transportation Board to determine whether or not the Canadian Pacific has met its obligations to the people of South Dakota,” Gov. Daugaard said. “This examination is imperative because past support for the Canadian Pacific’s purchase was based chiefly on promises it made to the STB.”
The petition serves as an official inquiry with the STB to determine if the CP lived up to the representations it made while seeking to acquire the DM&E. The Governor has asked the state Attorney General’s Office to assist in filing the petition.
uh-oh, Looks like CP is reneging on their deal.
Now Christine Brown from Canadian Pacific tells me:
At the time Canadian Pacific (CP) was in the process of acquiring the former DM&E it committed approximately $300 million in improvement and replacement capital. In fact, from 2008 through July 2013, CP has invested more than $400 million to improve the safety and efficiency of the former DM&E network.
Yet, even with all those improvements, the CP
Christmas Holiday Train still did not come to South Dakota last year.
I hope I am not the only one to catch the corporate double speak in that statement. ‘Safety and efficiency’ is not the same as ‘improvement and replacement.’ They are related, but not the same.
Now it is rumored that CP might sell its 660 mile line in South Dakota.
from CP spokesperson Christine Brown again:
CP is currently reviewing a 660-mile section of its 2,500-mile Midwest Network. No decisions have been made as the process continues. It should be made clear if a decision was made to sell the 660-mile stretch, it would only be with a party that can provide quality service to shippers and grow the business. Again, no decisions have been made as the process continues.
I am going add a bit more, when the Milwaukee Road Railroad went in to their death spiral, much of track in South Dakota went into break/fix mode and sometimes not even that. Maintenance on the lines was deferred. DM&E started to rehabilitate the track, east river, and was in the process of asking for a loan to finish the project when they were bought out by CP. It is a good bet that there are segments of track that hasn’t seen much in the way of real maintenance since 1970’s or possibly even later than the 1960’s.
This part of the story is still developing…..stay tuned.
Heading south, the rail line from Napa Junction to Platte all but done. The last locomotive to use that rail was a single unit that traveled to Tabor, spent the night then then back to Napa Junction, north of Yankton. Just to show the line could be used. That was about ten years ago. Most of the line is still there, however it needs a little TLC ( okay, a lot of TLC) However, there might be a chance. An ethanol plant, east of Wagner, was looking at upgrading the line, but didn’t come up with the money. The state was going to sell the line for $1,500,000, and estimates it would cost $30,000,000 to 50,000,000 to rehabilitate the rails. That single locomotive? It went up to Aberdeen to spread ballast on the Britton line rehab project. It is now stranded in Aberdeen, broken down.
There are many more examples. Bottom line, while railroad can make an small profit with moving grain, they can’t make enough to justify the cost of laying new rail or even really keep up the rail they already have. The Railroad needs something else besides grain, to make it worthwhile.
Bruce Lindholm at the Department of Transportation told me the best way to improve the rail system is to get businesses to locate next to a rail and then use it.
There are plenty of places that companies locate, and have good access to rail. However, businesses can locate almost anywhere, have and door to door service by truck. Investing in private rail is a long term commitment. Before any rail is laid to a facility, that facility needs to commit to be around for awhile either accepting and producing some kind of freight. In today’s economy getting such a commitment is almost impossible. If the railroading companies what a (larger) piece of the transportation pie in South Dakota, they are going to have to (really, really) step up their game. What worked in the late 1900’s, won’t work today.
What do our elected officials have to say about all this?
From Repsentitave Mike Verchio, ( R )Dist. 30 Chairman of the House Transportation Committee
As I understand the finding of the Surface Transportation Board during the purchase of the DM&E lines CP promised to do approximately $300 million in upgrades to the rail beds & rails . To date they have not documented those improvements . Those were conditions of the purchase . As far as aspirations for rail service in South Dakota we would like more & better service , solid track , decent train speeds & no restrictions on inter changes . That means no paper barriers such as restrictions on the types of commodities carried & let others use existing connections without large fees & various other prohibitions .
From Governor Dennis Daugaard’s column Sept. 6, 2013
When the Canadian Pacific purchased the line from the DM&E in 2008, it promised more efficient service, more competitive shipping options and the investment of hundreds of millions of dollars in the line. At the time, the people of South Dakota relied upon these promises and supported the acquisition.Last December, the Canadian Pacific Railway announced that it may sell the portion of the DM&E line that runs from Tracy, Minnesota to Colony, Wyoming, including the entire line in South Dakota. When I learned of CP’s intentions to sell the line, I reached out to the company’s president to verify that the company had kept its initial promises for investment in improvements. Unfortunately, my request went largely unanswered. Consequently, I felt compelled to file a petition, on behalf of South Dakota, with the federal Surface Transportation Board, asking these same questions.
This week I am traveling to Washington, D.C. to encourage federal officials to get to the bottom of this. South Dakotans deserve to know whether CP kept its promises. This line is too important to the farmers and ranchers – and to all people in our state – for these questions to go unanswered.
The most telling came from my own State Representative Steve Hickey ( R ) Dist. 9 and member of the Transportation Committee.
Railroads in SD are not an issue that is on my radar or that I’m versed in.
The railroads are quietly slipping away. A little bit at a time. It won’t be too long before Railroads in South Dakota are the stuff of legends. The people that once rode the train will now drive themselves, take the bus or fly. The freight that once traveled from the small towns to the markets on rail, will be moved by trucks.
Since we have an election coming up, I also asked some of the candidates:
Gubernatorial Candidate Lora Hubbel:
My emphasis would be to have as much as possible in private hands…..that being said rail is infrastructure. Utilities and infrastructure are the only times we should use Public Private Partnerships. The rails need fixed and if we can “find” $8 million in the budget, Im sure can come to some sort of way to fix the rails. Until we know how much CP in indebted to the rail we don’t know how much we need to come up with. But I assure you I will not hire my brother, sister, cousin-in-law to reap the benefits of fixing the rail lines.
Gubernatorial Candidate Mike Myers:
This is one of those ‘slow burn’ topics, that builds up over time. Politically speaking, this isn’t an sexy issue, it’s ugly, with deep rooted feelings on all sides.
Everyone I spoke with are saying, South Dakota needs a strong, vibrant rail system. No one is saying how do we get there from where we are now.
The readers of the South Dakota War College are some of the most well informed, and innovated thinkers in the state. I stated before there are no quick fixes or easy answers, but we don’t shy away from something because it’s hard, we tackle it, we wrestle with it, then we own it. Now it’s your turn, dedicated reader (if you gotten this far, you surely are); What should we do, if anything about South Dakota’s Railroads?