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Daugaard says won't oppose sale of DM&E line

  • Associated Press
  • February 14, 2014 - 3:00 PM

PIERRE, S.D. — Gov. Dennis Daugaard said Friday he will not oppose the sale of the west end of the Dakota, Minnesota & Eastern Railroad line, a track that runs mostly through South Dakota.

Canadian Pacific Railway Ltd. announced last month that it is selling the line to Genesee & Wyoming Inc. for about $210 million. The sale is subject to U.S. Surface Transportation Board approval, and Daugaard this week sent a letter to the board saying he has reviewed the sale and won't oppose it.

"I have great hope for G&W's future in South Dakota, and I want to express a warm welcome to them," Dugaard said in the letter.

The deal includes 660 miles of track between Tracy, Minn., and Rapid City; north of Rapid City to Colony, Wyo.; and south of Rapid City to Dakota Junction, Neb. Also included are connecting branch lines and track in Nebraska from Dakota Junction to Crawford.

Daugaard earlier said he wanted assurances that Genesee & Wyoming would maintain and operate the line between Pierre and Rapid City, provide a high level of service over the long term and maintain competition in shipping rates and access to markets.

Genesee & Wyoming officials said the company will continue to provide freight service on all parts of the line it is purchasing. The line ships grain, bentonite clay, ethanol, fertilizer and other products.

"It's our intention to make full use of all of it. It's a great piece of railroad, and there's a tremendous traffic base across it," said Jerry Vest, Genesee & Wyoming's vice president of government and industry affairs.

The company has asked the Surface Transportation Board for a quick review, with the hope it can gain ownership and control of the line by mid-year, Vest said.

Genesee & Wyoming started in 1899 with a short line in upstate New York, and it still operates that line as part of its system of 108 freight lines, Vest said.

"We are in it for the long haul, so to speak," he said.

In his letter, the governor said he met with Genesee & Wyoming's top executives, shippers and officials in other states before deciding not to oppose the sale.

"I felt it was necessary to conduct this level of due diligence because the future viability of these rail lines is imperative to South Dakota's future growth. Agriculture is the backbone of South Dakota's economy and access to competitive shipping options is essential to South Dakota's agricultural economy," Daugaard wrote.

He did say, though, that it's still unclear whether Canadian Pacific has met its obligation to invest $300 million in upgrades as part of its 2007 purchase of the line. The Surface Transportation Board has decided that Canadian Pacific must provide that information.

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