MICHELE NORRIS, host:
There aren't a lot of victories to celebrate when you're part of a group called Citizens Against Government Waste, but today it's a different story.
Mr. DAVID WILLIAMS (Citizens Against Government Waste): We were thrilled. We were ecstatic.
NORRIS: David Williams said his group is celebrating news that late yesterday the Federal Railroad Administration rejected a $2.3 billion loan, requested by the Dakota, Minnesota & Eastern Railroad. The DM&E wanted the loan to help fund a $6 billion railroad expansion project, and most opponents had been expecting the opposite result.
NPR's David Schaper reports.
DAVID SCHAPER: It would have been the largest U.S. railroad construction project in over a century. Nearly 300 miles of new track, from Western South Dakota to the coal mines of Wyoming's Powder River Basin, and the plan called for upgrading more than 600 miles of existing track through Minnesota to accommodate long train shipping coal to the East. But at $2.3 billion, it also would have been the largest federal government loan to a private U.S. corporation, easily topping the $1.5 billion Chrysler bailout.
After nine years of planning and proposals, lawsuits, legal wrangling, and high-powered lobbying, it came down to simple financial worthiness. And late yesterday, the Federal Railroad Administration announced that the project presented too high of a risk concerning the railroad's ability to repay the loan.
Mr. WILLIAMS: To say that we were shocked is an understatement.
SCHAPER: David Williams of Citizens Against Government Waste.
Mr. WILLIAMS: Mainly because it had some very influential members of Congress -and one, in particular, Senator John Thune.
SCHAPER: A South Dakota Republican who had previously served in the House, Thune worked as a lobbyist for the DM&E before elected to the Senate and quietly talked into a transportation bill legislation dramatically increasing funding for federal railroad loans. In a recorded statement on his Web site, Thune ripped the lobbying effort against the loan, saying South Dakota's economy will suffer as a result.
Senator JOHN THUNE (Republican, South Dakota): Sadly, with today's decision, the significant rail needs in South Dakota and the region, will not be addressed and our small-town economies will pay the price. Simply put, there was a huge amount of money spent to sabotage this project by powerful special interests and their hired guns. This is a case of a special interest beating the little guy.
SCHAPER: Those opponents included the powerful Mayo Clinic in Rochester, Minnesota and its allies, who fought the project largely over concerns about the noise and safety of dozens of trains a day, each a mile long, rumbling just blocks away from the prestigious Medical Center. Supporters countered that the project would create jobs in hard-hit parts of the country and could lead to cheaper prices for electricity.
Kevin Schieffer, president and CEO of the DM&E, says he's disappointed with the decision but insists the expansion project isn't dead yet.
Mr. KEVIN SCHIEFFER (President and CEO, DM&E): We've got a lot to do and the project is too important I think not to happen. There are an awful lot of supporters in the agriculture community, the energy sector, consumers, small communities, and employees and businesses all up and down the line who are counting on this thing too much for us to not make it happen then I do feel confident, we will make it happen at the end of the day.
SCHAPER: Schieffer says the Dakota, Minnesota and Eastern has the legal authority to move forward with the project and now will seek other ways to finance it, though he declines to say what options are being considered.
David Schaper, NPR News.
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