Good News for DM&E

[Anonymous]

The cash is in the bag for DM&E. It is other future projects that are potentially jeopardized by the proposed cut back.

Which makes this as good a time as any to reiterate my belief that such projects should be funded via a Multimodal Trust Fund (expanded from the Highway Trust Fund) paid for with fuel taxes (or an equivalent tax per energy unit) collected from all modes. That way all modes have access to user fees to replace non-general tax funds. Of course, it would also take a recognition from this and future Administrations that there is a big difference between the federal budget and user fee funds. Thus cutbacks in federal spending should not affect user fee funds.

And it is also counterintuitive to be promoting domestic energy development on one hand, and proposing cutbacks in funding for aiding the development of domestic energy sources, which is exactly part and parcel of the DM&E saga.

Memo to Mr. Minetta: We'll need much more than just the DM&E PRB expansion to meet future domestic energy development and production quotas this Administration has set.

[nanaimo73]

QUOTE: Originally posted by CSSHEGEWISCH

Note the entry in today's (2/17) News Wire. It looks like DM&E is going to have a most difficult time in raising the money to build this line.

Perhaps DME should talk to the Vice President.
This project would bring jobs to his State. It may also reduce the need for Mideast oil in the USA, which would reduce the need for American Forces in the region after they get out of Iraq.

[CSSHEGEWISCH]

Note the entry in today's (2/17) News Wire. It looks like DM&E is going to have a most difficult time in raising the money to build this line.

[bobwilcox]

QUOTE: Originally posted by cementmixr

QUOTE: Originally posted by bobwilcox

I was at the C&NW untill 1982...

Bob:
I believe you were mentioned in a Trains a few years ago... Ed Ellis refered to a Bob Wilcox at C&NW who worked with soda-ash pricing and traffic in 1980.

Enjoy your posts here. Thanks.

Yes, I know fast Eddy. His latest project is to bring passenger trains back to La Veta Pass. I'm thinking about encouraging several friends showing up for the first run.

[Anonymous]

QUOTE: Originally posted by bobwilcox

I was at the C&NW untill 1982...

Bob:
I believe you were mentioned in a Trains a few years ago... Ed Ellis refered to a Bob Wilcox at C&NW who worked with soda-ash pricing and traffic in 1980.

Enjoy your posts here. Thanks.

[Murphy Siding]

QUOTE: Originally posted by futuremodal

90 days for the FRA approval of the 2.5 billion dollar bailout, and then ye of little faith shall be discombobulated.......

Bailout is an odd term to use.(?)

[MP173]

I think, but I am not sure, that BNSF runs PRC to Paducah for loading at the Ohio River. Please correct me if I am wrong. Also, UP seems to run some coal out of St. Louis down the former IC line, but i dont know where it goes.

If we are looking at large increases in coal consumption in the next few years, I dont have confidence our current rail infrastructure can handle it. The crap hit the fan this winter with increased natural gas prices as electric generators switched to NG due to coal shortages.

Dave, have you crunched any numbers based on fixed and variable costs as to what the DME situation looks like? What is the current cost per mile for a 115 car unit train? It just seems to me that the debt load will be considerable and a reduction in rates wont be the answer. There will have to be adequate ROI for this to work.

ed

[Anonymous]

90 days for the FRA approval of the 2.5 billion dollar bailout, and then ye of little faith shall be discombobulated.......

[CaptainChuck]

If anyone were to become interested in DM&E I think it would be CN.

[Murphy Siding]

QUOTE: Originally posted by bobwilcox

Who will buy the DM&E if they get into the Powder River Basin? They do not have the market reach to stay independant or do they serve several coal fired utilities?

You've just hit the reason that makes me doubt that DM&E will ever get into the PRB.

[bobwilcox]

I was at the C&NW untill 1982 when we planned for access to the Powder River and where we would move the coal. We looked at a rail transloads at Clinton, IA and East St. Louis, IL. Neither one ever panned out. I beleve the only significant rail/water facility moving Western Coal to N. American customers is at Duluth, MN. I would like to hear about any other facilites.

The problem at Clintion is that the Mississippi River above Alton, IL is a marginal operation since it is closed in the winter. Winona has the same problem. The extra costs for transloading and financing terminal facilities just could not be justified. Of course connecting railroads were very aware of this issue at sent their revenue needs in light of the threat posed by rail/water transfers.

[Murphy Siding]

QUOTE: Originally posted by nanaimo73

QUOTE: Originally posted by Murphy Siding

samfp1943: I am a total computer dummy. How do you access the entire article on the newswire? I can see headlines, but not the whole story. Can someone help me out? Thanks

Just click on the
TRAINS News Wire for February 15, 2006
Your arrow will turn into a hand when you are on a link.

Boy, that was easy.[:I][D)] Thanks. I guess I had been trying to find some something big and bold, that said Hey!-pu***his button dummy!

[nanaimo73]

QUOTE: Originally posted by Murphy Siding

samfp1943: I am a total computer dummy. How do you access the entire article on the newswire? I can see headlines, but not the whole story. Can someone help me out? Thanks

Just click on the
TRAINS News Wire for February 15, 2006
Your arrow will turn into a hand when you are on a link.

[Murphy Siding]

samfp1943: I am a total computer dummy. How do you access the entire article on the newswire? I can see headlines, but not the whole story. Can someone help me out? Thanks

[blhanel]

QUOTE: Originally posted by bobwilcox

Who will buy the DM&E if they get into the Powder River Basin? They do not have the market reach to stay independant or do they serve several coal fired utilities?

They'll have the capability to serve alot of them if they build the trans-load facility at Winona to load barges.

[bobwilcox]

Who will buy the DM&E if they get into the Powder River Basin? They do not have the market reach to stay independant or do they serve several coal fired utilities?

[blhanel]

Just checked the DM&E's web site, and here's their news release-

http://www.dmerail.com/News/DME%20Press%20Release%2002-15-06.pdf

[samfp1943]

QUOTE: Originally posted by Murphy Siding

Today's local newspaper headline is that DM&E wins approval of STB. Now, all they have to do is find some money, for a loan that Uncle Sam will guarantee.

Murphy; This was in the NEWSWIRE for the 15th, there has been so much interest that I thought this might be worth posting for those of you in that area.

[Cut and pasted from that TRAINS Newswire as follows]

Sam
TRAINS News Wire for February 15, 2006

Wednesday’s railroad news:
- STB grants final approval to DM&E coal line construction project
- Fund established to support photographer sued by UP
- Jacksonville's Amtrak station marks black history month
- Rhode Island plans expanded commuter rail service
- EMD names new vp of International Sales and Service

STB grants final approval to DM&E coal line construction project

WASHINGTON — The Surface Transportation Board Wednesday announced that it has issued a decision granting final approval to the Dakota, Minnesota & Eastern Railroad to construct a new 280-mile railroad into Wyoming’s Powder River Basin, subject to extensive environmental mitigation conditions. This decision completes the STB’s review of DM&E’s proposed construction project.

DM&E, headquartered in Sioux Falls, S.D., proposes to tap the coal-rich Powder River Basin of Wyoming, now served by BNSF Railway and Union Pacific, by building the new railroad from its existing east-west line near Wall, S.D., generally west into the mining area of eastern Wyoming.

DM&E is an 1,103-mile regional that in 1986 took over Chicago & North Western’s east-west secondary, mainly agricultural route between Winona, Minn., on the Mississippi River, and Rapid City, S.D., plus a handful of branches, and today is one of the largest Class II roads in the U.S. In 1996, DM&E acquired more C&NW track, from Colony, Wyo., through Rapid City to Crawford, Neb., on the BNSF coal line. DM&E also reaches Mason City, Iowa, on a line south from Owatonna, Minn.

Sister railroad Iowa, Chicago & Eastern, which connects with DM&E at Mason City, began operations in 2002 by taking over 1,400 miles of former Milwaukee Road track from Washington Corp.’s I&M Rail Link, formerly owned by Milwaukee successor Soo Line and then Soo parent Canadian Pacific.

Using IC&E, DM&E could move coal from Wyoming all the way to Chicago by rail, or presumably to a new coal-transfer point on the Mississippi River, and/or interchanges in the Midwest with other railroads. IC&E’s system is generally “Y”-shaped, linking Chicago, Kansas City, and St. Paul, with an east-west “corn line” from the river west through Mason City, feeding Into farming areas of northwestern Iowa and southwestern Minnesota.

After the STB approved the construction of DM&E’s coal line in 2002, various parties sought judicial review. The court upheld the STB with respect to all transportation issues and most of the environmental issues that were raised, but the court directed the STB give further consideration to four environmental issues: (1) the question of whether mitigation for increased horn noise is warranted; 2) the relationship between vibration and horn noise; (3) the impact of any potential increased coal usage and related air emissions from this project; and (4) assurances that the procedures to govern the historic review were in place.

The STB’s Section of Environmental Analysis (SEA) then conducted an independent analysis of the four issues remanded by the court and prepared a Supplemental Environmental Impact Statement (SEIS) setting forth its conclusions and mitigation recommendations. In its decision, the Board reviewed SEA’s supplemental environmental analysis and concurred with and adopted the SEIS. As directed by the court, the STB reweighed the merits of DM&E’s underlying proposal to reflect the results of the SEIS and concluded that, despite certain potential adverse environmental impacts, not all of which can be fully mitigated, the proposed project has demonstrated transportation benefits and would further the public interest.

Accordingly, the Board gave final approval to DM&E’s application, subject to 147 environmental mitigation conditions. The full decision can be found on the Board’s Web site, www.stb.dot.gov, under E-lilbrary, then under Decisions & Notices, beneath the date “2/15/06.”

[Anonymous]

This is GREAT news for the DM&E. I was hopeing that they where going to make it this far. This is extreamly good news for the DM&E Railroad. Congrats to DM&E. Allan.

[Murphy Siding]

Today's local newspaper headline is that DM&E wins approval of STB. Now, all they have to do is find some money, for a loan that Uncle Sam will guarantee.

[Anonymous]

I have my doubts that the DME will be able to succeded at all in the PRB. I have some reservations about the way they spend the money and if they go overbudget plus there is no online traffic that they need.

[Anonymous]

For what it's worth (cut and pasted from TRAINS newswire 01/09/06):

"Railroads struggling to keep up with coal demand

GILLETTE, Wyo. - Railroads are trying to keep up with the increasing demand for coal shipped out of Wyoming, an industry official said in an Associated Press story that appeared in the Billings (Mont.) Gazette.

As of Dec. 24, Wyoming produced an estimated 399.2 million tons of coal in 2005, including about 385.5 million in the Powder River Basin of northeast Wyoming alone, according to the U.S. Department of Energy’s Energy Information Administration (EIA). The EIA estimates that the United States will demand an additional 100 million tons of coal annually from the Powder River Basin by 2010.

Coal production increased slightly in the Powder River Basin in 2005 even though railroads were unable to fully restore capacity on a triple-track main line that was damaged in the spring. Union Pacific and BNSF were able to ship about 85 percent of scheduled coal trains on Wyoming's main coal export route in 2005.

The disruption of coal exports out of the Powder River Basin may contribute to higher heating costs this winter.

The railroads will have to make significant progress on restoring and boosting shipping capacity on the joint line in order to meet what is expected to be unprecedented demand for Powder River Basin coal in 2006, Thomas Canter, executive director of the National Coal Transportation Association, said.

"We'll be very fortunate if we can ship 345 to 350 million tons for 2006," Canter said.

One project to boost coal shipments is the proposal by the Dakota, Minnesota & Eastern Railroad to ship Wyoming coal east through South Dakota and Minnesota.

If constructed, the DM&E project would be the largest railroad construction project in the United States in 100 years. DM&E plans to build 280 miles of new line into Wyoming's Powder River Basin coal region from Wall, S.D., and to rebuild its 600-mile main line from southern Minnesota to Wall. DM&E also plans to upgrade 150 miles of its line from Wall, S.D., northwest through Rapid City to Colony, Wyo."

Two things jump out. 1) It's been 10 months now and still the triple track Orin line is running at less than capacity. Anyone still doubt the benefits of dispersed redundancy? 2) If estimated demand for PRB coal is expected to increase by 25% in 2010, doesn't this bode well for DM&E's expected market share and demand-induced pricing power (assuming they can get the project done before then)?

[kenneo]

QUOTE: Originally posted by futuremodal

How was this done? Did either DM&E and/or DMV&W have keys to the BNSF switches? Or am I missing something regarding the track layouts in Aberdeen? Does someone have a map of Aberdeen via Mapquest they could provide?

This is more intriguing than I first thought!

There will be 5 tracks involved. A joint runaround for moving the power from one end to the other of the yard for the short lines, one ICD (Interchange Delivered) and one ICR (Interchange Received) track for each short line - restricted by agreement to interchange to or from the BN only.

So, lets say that A is DME ICR, B is DME ICD, C in the runaround, D is DMVW ICR and E is DMVW ICD. The DME slips into town with a cut for the BN and a cut for the DMVW. (Agreement says that all of this is supposed to go the the BN. The deal is to prevent the two short lines from cutting the BN out of line haul business by forcing them to use BN for a line haul between them.)

The DME crew cuts off from the BN cars they are leaving in Track B and set the DMVW cut into Track D, cut off and run back on Track C, couple up to Track A, make the air and terminal inspection, and flee.

Nobody on the BN will be the wiser until someone comes along that KNOWS what cars are supposed to be on what track or the shortlines actually get caught making a "NO-NO" interchange. Unfortunately, neither of these conditions will exist for long without being discovered.

[kenneo]

QUOTE: Originally posted by futuremodal

QUOTE: Originally posted by bobwilcox

QUOTE: Originally posted by Murphy Siding
IF DM&E gets into the PRB to take coal traffic away from both BNSF and UP, what motivation would either of them have to work very hard to partner up with DM&E for grain shipments?

Since Mike Walsh, 20 years ago, the UP's business groups are run as seperate units. The grain group will be happy to work with the DM&E as long as they can make money for the grain group.

.

I wonder, is BNSF's corporate makeup anything like UP's? My guess is no given the bend-over-backwards-to-hold-the-bottleneck mentality of BNSF.

It also seems to me that the other Class I's do not engage in such bottleneck obsession as exhibited by BNSF, or at least to the same degree. At least I never read any news items about UP/KCS/NS/CSX/CP/CN bottleneck complaints, it all seems to be BNSF.

Are there any examples of UP bottleneck hording? CN? CP?

Yes. The UP at Eugene, OR. The W&P and the CORP use the same tracks in the same yard to interchange between the UP and themselves, but there is evection clause in the lease agreements from the SP days that prohibits direct interchange between the two short lines.

I don't know if it still is in effect, but early on there was a provision in the CORP agreement that denied direct operation for the for mer Coos Bay Branch and the Siskiyou - both CORP properties and leased under the same agreement.

When the SP and the BN were trying to shed their Tualatin Valley and Lower Columbia branches, super-restrictive interchange restrictions were in the contracts -- and no one would lease or purchase the lines. So the State of Oregon stepped in and purchased the "A" Line, the United line and the OE north of Salem (Labish) and promptly leased them to the Willamette and Pacific (operating as the Portland and Western) with "home road" operating access to all of the various former class 1 properties North of Newberg and Salem. Part of the result is that there is now direct service between the Roseburg area and Rainer for logs between Roseburg Lumber and Longview Fiber, International Paper and Weyerhaeuser and between the various Weyerhaeuser hardwood plants scattered on the CORP, W&P, P&W and POTB.

The State of Oregon has been death on these restrictive agreements - preventing them where they can and getting them rescinded where possible if they didn't get them stopped.

[Anonymous]

QUOTE: Originally posted by Murphy Siding

QUOTE: Originally posted by futuremodal

Oh ye of little faith!

I'll buy you a steak dinner, the day DM&E hauls its first coal train out of PRB on its new extention. You'll be able to take Amtrack from your city to my city, so that will be easy. <<<<<I'll give equal odds on either event happening![;)]

I'll just drive, as long as it's not in winter. Besides, the odds of Amtrak not existing by then are right on par with those other events.

[Murphy Siding]

QUOTE: Originally posted by futuremodal

Oh ye of little faith!

I'll buy you a steak dinner, the day DM&E hauls its first coal train out of PRB on its new extention. You'll be able to take Amtrack from your city to my city, so that will be easy. <<<<<I'll give equal odds on either event happening![;)]

[Anonymous]

Oh ye of little faith!

[Murphy Siding]

The newspaper (Sioux Falls, S.D. Argus Leader) yesterday said that DM&E got the go-ahead for their $2.5 billion dollar government loan, but has to wait another 30 days for another hurdle of some sort. Interesting, though, is DM&E President's statement that they wouldn't proceed on the PRB extention untill they got some cotracts from utilities to haul coal. My own thought is: they have now reached a point, where the utility companies can use them to beat down the prices from BNSF and UP. Why buy the cow, when you can force down the price of milk? Now is when the whole thing is apt to fizzle out.[xx(]

[bobwilcox]

The NS, CSXT and UP have the same view as the BNSF. Instances of closed access have come up with all of these carriers. However, the railroads involved often settle the issues. If you would like specifics suggest you do a search of old Traffic Worlds or Wall Street Journals over the last 25 years.