WASHINGTON - Federal officials on Monday turned down the Dakota, Minnesota and Eastern (DM&E) Railroad's $2.3 billion loan application for a coal train project across southern Minnesota.

The federal loan request, one of the largest ever for a U.S. company, had been loudly criticized by the Mayo Clinic and by Minnesota lawmakers in Washington.

The Federal Railroad Administration (FRA) found the project presented "too high a risk concerning the railroad's ability to repay the loan."

Federal officials said the railroad cannot appeal the decision. Kevin Schieffer, railroad president and chief executive officer, said he would pursue other options to obtain the financing.

Factors in the decision by FRA Administrator Joseph Boardman included the size of the loan relative to DM&E's existing operations and uncertainty over whether the railroad could ship as much coal as projected.

In addition, the railroad didn't sufficiently address how it would handle any cost overruns and schedule delays, the government said.

While the decision was based largely on financing for the $6 billion project, much of the opposition to it focused on safety and noise.

"The concerns of Rochester and the Mayo Clinic needed to be addressed before the project moved forward," said Gov. Tim Pawlenty. "Those concerns weren't addressed."

The DM&E Railroad wants to build about 280 miles of new line to Wyoming's Powder River Basin coal mines and reconstruct 600 miles of existing track in South Dakota and southern Minnesota.

Schieffer said he will pursue other avenues for financing, although he didn't specify what they might be.

"We've had disappointments before, and we'll keep moving forward," he said. "I think obviously we will be looking at different options," he said.

Schieffer maintains the support of Minnesota farm groups, which expressed disappointment in the loan decision

"This is not good news for agriculture, and it's not good news for rural Minnesota," said Blue Earth County corn and soybean grower Kevin Paaps, who heads the Minnesota Farm Bureau Federation. "The problem is my customers aren't at the end of the farm driveway. Transportation is extremely important to us."

Paaps predicted that the decision could also be a setback for the state's growing renewable fuels industry, which relies heavily on transportation infrastructure.

"It's not just railroads," he said. "It's roads, it's bridges, it's the Mississippi River."

In Rochester, the business community rallied around the Mayo Clinic's opposition and turned the expansion into a potent political issue.

"This is a victory for good government and accountability," said newly elected U.S. Rep. Tim Walz, a Democrat who represents southern Minnesota.

Train traffic through Rochester would have greatly increased, critics said.