While I can't comment on who should have paid for what, it's worth noting that two-mile sidings now appear to be the standard, where they can be made to fit.

Freight trains frequently exceed a mile in length, and, unless you want the train to creep along along at less than ten miles per hour for a substantial distance, you are not always
going to get an absolutely perfect stop within a few feet of a designated point.

With two-mile sidings and 45-mph switches (curved route can be taken at 45 mph), shorter trains can actually make running meets without either of them having to come to a complete stop -- if the timing works out just right.

In North Carolina, where I live, in part to provide faster passenger train speeds, the state has worked with Norfolk Southern (NS) to either upgrade or build four new sidings between Raleigh, N.C., and Greensboro, N.C. All four of these sidings ended up being approximately two miles long -- with the 45 mph turnouts. Of course, the sidings were not the only upgrades. Others included CTC signals, changes in curve alignments in upgrades in grade crossing protection at numerous sites. (The state, through the state-owned North Carolina Railroad Co., owns the right of way, so the state sees this as investing in its own property. NS, which leases and dispatches the line, also pays a substantial part of the costs -- and, in turn, gets to run its freight trains more efficiently.)

Often there are other considerations for siding lengths. At one of the above mentioned sidings, if a train gets there substantially before the other for a meet, it will stop short of a grade crossing leading to a residential area -- rather than pulling all the way up to the signal. In this case, the train is still within the siding, but the signal at the end of the siding is out of sight around a curve. The first train begins moving at restricted speed when the second train has occupied the crossing. Amtrak trains are short enough that they fit between this crossing and and the signal at the end of the siding.

-- Ernest