Gov. Dennis Daugaard has pledged $4 million as state government’s match for a federal Tiger III railroad rehabilitation grant that is sought for restoring an additional segment of the old Mitchell to Rapid City line.
Dusty Johnson, the governor’s chief of staff, confirmed that the governor made the commitment. He also acknowledged the source for the money hasn’t yet been identified.
Johnson said the governor would make the request from the Legislature if the grant is awarded before the 2012 legislative session ends in March.
The state Railroad Board authorized an application for the Tiger III grant Wednesday. The requested amount will be in the range of approximately $18 million to $24 million.
A Tiger II grant is helping pay for the current work between Mitchell and Chamberlain on the line.
The Tiger III grant would be used for rehabilitating past Chamberlain to at least the Presho area, a stretch of about 42 miles, with an ultimate goal of reaching the Vivian area, which is another 11 miles.
The estimated cost is about $600,000 per mile, according to Bruce Lindholm, administrator for the state’s railroad programs.
The line, known as the MRC, is operated by Dakota Southern railroad under a state lease. Dakota Southern has pledged $2 million toward the Chamberlain-Presho/Vivian project.
Additional amounts of $125,000 apiece have been promised so far by the South Dakota Corn Growers and South Dakota Wheat. Soybean producers have also been approached about making a commitment to the project.
“I think that is going to be a great plan for us,” railroad board chairman Todd Yeaton of Highmore said.
The work on the Mitchell-Chamberlain stretch has already prompted construction to begin on the Liberty Grain loading and fertilizer complex east of Kimball, while Dakota Mill is in the process of finishing arrangements to build a loading facility on the west side of Kimball.
Johnson said the governor’s pledge is an effort to return some of the $38 million taken by the Legislature in 2006 from the state’s railroad trust fund.
The fund had received $41 million in proceeds from state government’s forced sale of substantial segments of rail system to Burlington Northern Santa Fe railroad.
Burlington Northern had been a main operator for nearly three decades on much of the state-owned lines that were purchased in the wake of the old Milwaukee Road bankruptcy.
Burlington Northern invoked a contract clause to force the state’s sale after the Rounds administration sided with a competitor, the Dakota Minnesota and Eastern railroad, on a giant expansion project.
Dakota Minnesota and Eastern executives wanted to use their South Dakota operations as the hub for building a line into the Wyoming coal fields, which Burlington Northern Santa Fe already served. The project eventually foundered and Dakota Minnesota and Eastern was purchased by Canadian Pacific.
The state Senate initially wanted to take $42 million from the railroad trust fund in 2006 and put the money in the state’s property tax reduction fund. The House of Representatives set the transfer amount at $30 million. A conference committee found middle at $38 million.
The Legislature’s move has long rankled state rail-board members.
Burlington Northern’s November 2005 purchase covered the previously state-owned lines between Aberdeen and Mitchell, Mitchell and Canton, Canton and Sioux Falls, and Mitchell and Sioux City, Iowa.
Burlington Northern had received control of the previously state-owned Main Line between Terry, Montana, and Ortonville, Minn., through Aberdeen in 1991. One of the route’s purposes is delivering coal to the Big Stone power plant.