ADMINISTRATION REJECTS LOAN FOR $6 BILLION COAL TRAIN

WASHINGTON, DC -- The Federal Railroad Administration has denied a $2.3 billion federal loan for the Dakota, Minnesota and Eastern Railroad's planned coal train project.

The DM&E wanted to add track to the Powder River Basin coal fields in Wyoming and upgrade its existing line in South Dakota and Minnesota. The $6 billion project would have involved building about 280 miles of new track and upgrading 600 miles of existing track so trains could haul coal for power plants.

The Mayo Clinic and the city of Rochester, Minn., strongly opposed the project, arguing the increased high-speed train traffic through the city could threaten the safety of patients at the clinic, which lies a few hundred yards from the tracks.

Federal Railroad Administrator Joseph H. Boardman said in his decision that "there remained too high a risk" that the railroad could not repay the massive loan.

DM&E president Kevin Schieffer said the company is reviewing the decision and that it is too soon to say whether the decision permanently dooms the project.

"It's obviously a disappointment, but not the first we've had in the last nine years and I'm sure it's not the last," he said.

Asked whether the decision dooms the project, Schieffer said, "I think it's premature for anybody to rush to judgment on it one way or the other."

He said it's too early to speculate and that "there's nobody pulling up stakes this afternoon."

Minnesota Gov. Tim Pawlenty, a Republican, called the decision "really good news."

"We wanted to find a compromise between some real concerns of the Mayo Clinic and the Rochester community, and the DM&E, and that wasn't achieved, so I'm glad the loan was denied," he said. - Mary Clare Jalonick, Fredric J. Frommer and Carson Walker, The Associated Press, The St. Paul Pioneer Press