South Dakota to sell state-owned rail lines

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A loaded D&I Railroad rock train heads south over South Dakota-owned track at Fairview, S.D. on Nov. 4, 2016. The state plans to sell its rail lines.
Steve Glischinski

PIERRE, S.D. — The state of South Dakota is getting out of the railroad business.

The South Dakota Railroad Board announced this week it will be putting all state-owned railroad lines up for bid on Aug. 26. Approximately 532 miles of line are included, but this includes abandoned lines that are railbanked and lines that have not been used in decades.

South Dakota entered the railroad business in a big way following the Milwaukee Road’s 1977 bankruptcy and subsequent retrenchment to a Midwest-only railroad. The only through route across the state was the Milwaukee’s main line through Aberdeen to Miles City, Mont. Hundreds of miles of secondary and branch lines laced the state, making the Milwaukee South Dakota’s largest railroad. But the Milwaukee Road wanted out, and on Feb. 26, 1980, it embargoed 4,600 of its 9,800 route miles, including all the lines in South Dakota save the main line to Miles City and two branches.

To preserve rail service, in March 1980 the state legislature created the South Dakota State Railroad Authority to purchase rail routes that the state identified as essential. In November 1980 it purchased 760.5 miles of Milwaukee Road track and later picked up other lines. [See “South Dakota Success,” Trains, September 2016.] Burlington Northern became the biggest operator of the lines. The Milwaukee kept the main line across the state for use by coal trains, but in 1982 it was sold as well, and BN became the operator. BN successor BNSF Railway purchased most of the BN-operated lines in 2005, but other lines remained owned by South Dakota. Those lines will now go up for sale. They are:

— Mitchell to Rapid City (MRC Line) approximately 285.1 miles. The portion from Mitchell to Kadoka is leased to the MRC Regional Railroad Authority and operated by short line Dakota Southern between Mitchell and Presho. This portion was extensively rebuilt in 2011-14 to handle unit grain trains and includes the spectacular bridge across the Missouri River at Chamberlain; at 4,890 feet it was the longest bridge on the Milwaukee Road. Rails are still intact but unused from Presho to Kadoka; from Kadoka to Rapid City the line is abandoned with rails removed but is considered rail banked, although the former Milwaukee Maple Street Yard in Rapid City is intact and leased to American Colloid Company for car storage.

— Aberdeen to Geneseo Jct., N.D. and Jarrett Jct. to Britton, SD, approximately 76.6 miles. This track is leased to the Marshall Regional Railroad Authority through 2025 and is operated by Dakota, Missouri Valley & Western Railroad. DMVW holds right of first refusal on the line. The 72-mile Aberdeen-Geneseo Jct. line is former Great Northern/Burlington Northern, while the 4.7-mile line to Britton is ex-Milwaukee Road.

— Elk Point to Canton, and Beresford to Hawarden, Iowa, approximately 68 miles. These lines are leased to the Sioux Valley Regional Railroad Authority and operated by D&I Railroad. Sioux Valley Regional Railroad Authority holds an option to purchase, which may be assigned to D&I Railroad upon approval of the State Railroad Board. The 18-mile Hawarden-Beresford line is ex-Chicago & North Western.

— Huron to Yale, approximately 15.3 miles. Another former Great Northern route, the Yale line is leased to the East Central Regional Railroad Authority and operated by Rapid City, Pierre & Eastern. The line sees little traffic with only 224 cars moving in 2018.

— Interchange tracks between BNSF and Rapid City, Pierre & Eastern at Wolsey, S.D., approximately 4.2 miles leased and operated by RCP&E.

— Napa Junction to Platte, approximately 83.3 miles. The segment from Napa Junction to Ravinia (54.5 miles) is leased to Dakota Southern Railway, while Ravinia to Platte (28.8 miles) is railbanked.

It seems likely that current operators would make bids for the lines they are operating. However, the state might have a hard time unloading some of the rail banked lines such as Kadoka-Rapid City route, which passes through sparsely populated territory and has no on-line business or rail infrastructure.

The South Dakota Department of Transportation will publish rules for the sale on its website Aug. 26. Offers are due Nov. 21 by 10 a.m. Central time. The Railroad Board will review offers at a special meeting Dec. 4 and can start negotiations with prospects Dec. 18. State law requires any sale have the consent of South Dakota Gov. Kristi Noem. The federal Surface Transportation Board also must approve any sale.

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