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FRA approves RRIF loans for DM&E, RJ Corman Railroad Group


It isn’t the $2.3 billion the railroad had been counting on, but the Dakota, Minnesota & Eastern Railroad Corp. (DM&E) recently got the thumbs up from the Federal Railroad Administration (FRA) for a $48.3 million Railroad Rehabilitation and Improvement Financing (RRIF) loan.

The railroad will use proceeds from the loan — the DM&E’s second under the RRIF program since 2003 — to upgrade 134 track miles between Wall, S.D., and Colony, Wyo., to accommodate heavier freight cars hauling grain, ethanol and minerals.

The project calls for replacing 60 miles of rail between Wall and Owanka, and Whitewood and the South Dakota-Wyoming state line; repairing bridges between Wasta and Owanka and near Belle Fourche; replacing 55 track switches; installing 84,000 crossties; building a 1.5-mile siding in Midland; and resurfacing 93 grade crossings.

The FRA evaluated the loan “separately and independently” from the DM&E’s application for a $2.3 billion RRIF loan to help fund its proposed Powder River Basin project, the FRA said. Last month, the administration issued a decision denying that loan as an “unacceptable credit risk for federal taxpayers.”

The DM&E previously obtained a $233 million RRIF loan in 2003. The regional used those proceeds to upgrade track to 286k standards and modernize other lines.

Meanwhile, the FRA also approved a $58.9 million RRIF loan for the R.J Corman Railroad Group, which operates eight short lines in Kentucky, West Virginia, Pennsylvania, Ohio and Tennessee.

The company will use proceeds to rehabilitate 24 locomotives, purchase 200 new centerbeam flat cars and acquire 100 new coal hopper cars. RJ Corman also will use a portion of the loan to refinance debt incurred from purchasing railroad property, facilities, cars and heavy maintenance equipment.

Under the RRIF program, the FRA is authorized to provide $35 billion (including $7 billion set aside for regionals and short lines) in direct loans or loan guarantees to eligible railroads, state and local governments, and government-sponsored authorities to acquire, develop, improve or rehabilitate intermodal or rail facilities. Since 2002, the administration has approved 17 loans, including the two recent ones.

Contact Progressive Railroading editorial staff.

More News from 3/27/2007