This compilation features news articles and a few news-heavy E-mails that document the history of the Dakota Southern. E-mails not in the style of news, and government regulatory filings are published separately.
The Little Railroad That Can
By Luann Dart, South Dakota High Liner Magazine, ca 1995.
Two clouds of steel gray smoke belch into the blue sky and the red and black diesel locomotive of the Dakota Southern Railway erupts into motion. Engineer Kenny Andresen tugs a rope with his left fingers.
Whooooo-whooooo-who-whoooooo. Like a forlorn coyote’s howl, the train’s horn reverberates across the prairie, now turning gold with the lowering sun.
Its 7:30 PM and time to move. The locomotive of Dakota Southern Railway is on schedule out of Mount Vernon to Mitchell 12 miles away to hook up with 26 empty grain cars. The train will then chug back to Chamberlain, where the cars will be filled with the fall bounty. Then it’s back to Mitchell to meet the Burlington Northern train that will take the grain to distant terminals.
During the trip, the train will never top 10 MPH due to federal classifications based on track conditions. But the slow moving train rumbling across the heart of the South Dakota has a mission.
Owned by brothers Alex and Dick Huff, Dakota Southern is a short line railroad that links country elevators with the Burlington Northern main line at Mitchell. The 187 miles of steel track from Kadoka to Mitchell are a vital link for farmers who depend on the train to carry their grain to far-flung markets.
Wheat, sunflowers, soybeans, millet, buckwheat, flax, milo, and corn - and some rock- move along the rail.
It’s a very vital link, says Daniel Bull, with the Equity Exchange in Kadoka. The shippers would probably die a slow death without the rail, says Stan Collins, the manager of the Farmers Union Co-op Elevator in Kennebec, a community which is served by West Central Electric Cooperative. Anybody can buy grain, but it depends on your transportation if you’re going to be competitive or not.
Sweat streaks Andresen’s forehead. Earlier, the mercury had soared to 104 degrees and the evening air blowing through the train’s open window does little to cool the inside of the locomotive.
When Andresen started with Dakota Southern eight years ago, he knew nothing about engineering a train. I kind of like it. I’m my own boss. I’m the only one out here. There’s no pressure, he says today. Tree branches slap the side of the train as it creaks and screeches along the track.
The train does not operate on a fixed schedule, but runs on demand, paralleling I-90 and crossing the Missouri River at Chamberlain. It stops at Reliance, Kennebec, Draper, Murdo, Presho, Chamberlain, and Mitchell.
Somewhere around White Lake, Andresen will be relieved by another engineer at 2 a.m. Because of the glaring sun’s dangerous affects on the rail, the train only runs at night during the summer.
The steel lines of the track are always a concern. During the summer, heat will expand the rails, kinking them out of line. During the winter, the rail contracts, pulling as tight as a violin string. And the rail itself tends to push in the direction of all the heavy loads, so we’re slowly moving the railroad to Mitchell, Alex says.
The track is inspected at least once a week and the crews beat it back into shape under the hot sun and chilling winters. During the spring, the railway shuts down completely from four weeks to three months due to wet, soft ground.
This time of year, it’s keeping an eye out for sun kinks, Andresen says as he moves the train down the track. The air brakes shoosh now and then, hissing as they’re applied to keep the train’s speed around the 10 MPH mark. The locomotive, which is capable of traveling 65 to 90 MPH, seems to chomp at the bit.
Starting the train isn’t very difficult. It’s actually controlling the brakes properly that is the tricky part, Alex says. That’s the real test of an engineer is how well he keeps the train from going too fast down the rail. You’re always thinking about something, says Andresen, who is one of the railway’s 12 employees.
Dakota Southern is a bootstrap operation, Alex says, leaning back in his chair at the railway’s headquarters in Chamberlain. Everything in this office is second hand. Our basic rule is, you buy it second hand if you can’t get it third hand.
He proves his point when he removes a stack of used paper from a drawer, turns it over, and uses the blank side to print information from a second hand computer. Everything, including the mail, is reused in this office.
Among a row of scuffed chairs that line one wall of the office are two chairs bought at a Union Pacific auction at Grand Island, Neb., for $2 each. Both were once first class railroad lounge chairs, he says.
The computer is a couple of generations behind state of the art, but it thinks faster than I do, says Alex, a hefty man with short-cropped red hair. Wearing black, striped work boots, denim overalls and a blue workshirt, he folds his freckled hands across his chest as he waits for the computer in front of him to process some information.
The brothers own 23 cars and lease 165 grain cars. Four road locomotives and two switch engines - all second hand - are the workhorses for the company. Their destinations are scrawled on an operations board in the office in red, blue, black, brown, and green. SD Wheat Growers - 25 wheat - Chicago. Dak. Mill & Grain - 8 singles - Murdo. As Alex talks, Dick juggles calls on the telephone, which usually rests atop a stack of papers on his desk.
The railroad and farmers are as intertwined as they were more than 100 years ago when the track was first laid and towns sprang up beside it. The original railroad used by the Dakota Southern was built in two stages. The first track was laid from Mitchell to Chamberlain in 1883. Every town west of Mitchell was platted by land companies associated with the railroad, Alex says. The rail stopped on the eastern shores of the Missouri River until 1906, when the western tracks were laid by the Chicago, Milwaukee and St. Paul Railroad.
Dakota Southern Railway was born out of the same preservation that was required to lay those first tracks. When Congress passed the Stagers Rail Act of 1980, which deregulated the railroad industry, many short line railroads sprang to life. Faced with new competition, major railroads closed marginal or unprofitable sections of rail that split off from their mainlines.
Deregulation of the railroad industry in 1980 has changed the economics of it considerably, Alex says. There are over 400 short lines in the country, including four in South Dakota.
South Dakota’s dominating rail company, the Chicago, Milwaukee, St. Paul and Pacific went bankrupt Dec. 17, 1977. In March 1980, it stopped providing service in South Dakota south of Aberdeen.
Then the state’s taxpayers stepped in, approving a year long one-cent sales tax to purchase the railroad tracks. The $30 million needed to purchase the tracks was soon raised and in 1980 and 1981, the state bought 367.6 miles of the core system and 725 miles of the short lines.
I compliment the governor’s and taxpayers’ foresight back in 1980 to really take the big jump there. It was very far out of the ordinary for South Dakota to do what it did, Alex says. The state’s investment paid off in two years through higher grain prices for farmers, Alex says. Local elevators can pay more per bushel because of the lower transportation costs. The railway helps the country elevators stay in business by keeping the prices of grain competitive, Alex says.
Alex believes, however, that the state is missing an opportunity by not allowing competing railways to operate on the same state-owned track. It would make South Dakota probably the most attractive state anywhere for location of an industry that would be dependent on rail service. And the competition would keep everyone on their toes, he says. This railroad’s pretty well set up. Somebody else operating here would find us a pretty stiff competitor, he says with a smile.
The railway’s carload rates are based on distance - a shipper pays $400 to haul 3,300 bushels in one car from Chamberlain to Mitchell. The railroad can compete with the trucking industry on longer distances, but not in short hauls, Alex says.
Burlington Northern, which has operated South Dakota’s core rail system since 1982, used the track from Mitchell to Chamberlain for five years, but then pulled out in 1986. Faced with the treat of losing rail service completely, the area’s shippers asked the Huffs to establish a railway company.
In 1987, the Huffs rolled up their sleeves and went to work, proving that their little railroad company could succeed. To get from Mitchell to Chamberlain didn’t require a lot of work, Alex says, since the track had been in use. But reopening the track from Chamberlain west to Kadoka took the brothers 14 months. The first job was replacing a wooden railroad bridge that had burned out between Oacoma and Reliance.
A state grant, along with matching funds from the shippers and the railway, funded the bridge’s replacement. Otherwise, the expense of opening the track to Kadoka was carried by the railway. There were washouts and odd things like wind drifted dirt across the tracks and the track just disappeared, Alex says. We had to plow down to find it.
Another draw near Murdo had filled in with 15 feet of tumbleweeds. At least one area of track did not require much repair. Built in 1952, the bridge across the Missouri River by Chamberlain is the longest railroad bridge in the four-state area - just 300 feet short of one mile-- and in good condition. “Its our best mile of track on the railroad, Alex says, laughing.
On July 22, 1988, Dakota Southern Railway reached Kadoka and started full operations. In 1994, the railway moved 4.3 million bushels of grain and delivered 1,200 cars to Burlington Northern. That volume, however, is too small to qualify the railroad for any federal loans or grants, meaning the Huff brothers have has to sweat out every penny.
The track, still owned by the state and leased to Dakota Southern for $1 a year, is maintained using 50 percent of the railway’s freight charges paid to a regional rail authority, Any materials or labor which Dakota Southern puts into rail maintenance is reimbursed by the Mitchell-Rapid City Regional Rail Authority, which oversees the track’s maintenance.
Alex, who also engineers the trains, has driven his share of railroad spikes to keep the rail operable. During the summer, railroad buffs routinely stop by the Chamberlain headquarters to chat. Some are even given rides on the train - one visitor determined to ride every mile of Dakota Southern’s path, spent three days riding the train. But the romance of the rails isn’t what drew the Huffs into the business. The romance wears a little thin sometimes when you’re shoveling snow out of switched, says Alex, who describes himself as a railroad buff.
As the sun melts into the horizon, the Dakota Southern Railway locomotive ambles toward its Mitchell destination. Whoooo-whoooo-who- whoooo. The sound lingers across the prairie, then fades. The train continues on its journey that will take it past elevators, main streets and fields filled with ripening sunflowers.
This little railway has proven that it can.
S DAKOTA RAILROAD UPDATE (WEATHER)
Fri, May 19 1995 12:00 am . By David Voeltz on group rec.railroad
All railroads in the state have reported roadbed damages and operational difficulties as a result of the flooding. The Dakota Southern Railroad reports water over the rails in 5 locations between Mitchell and Presho. Damages are limited at this time to a roadbed and ballast section washout at MP386 west of Mt. Vernon. There are 2 locations between Oacoma and Reliance which will require the placement of riprap for bank stabilization.
The Dakota Minnesota and Eastern Railroad reports trackage out of service between Mansfield and Northville as a result of water over the rails for a distance of over 1/4 mile. Maintenance forces are installing additional surface drainage pipes 1 mile east of Wolsey at Cane Creek. This segment of Main Line Track washed out in mid-April and is in jeopardy again. The DM&E is closely monitoring the Main Line Bridge structure east of Arlington that is the primary channel for the ditch that will drain the stretch of Hwy 14 currently under water between Arlington and Volga.
The Sisseton-Milbank railroad reports saturated roadbed conditions with water standing on both sides of the track on the entire line segment. The Peever Slew area is especially bad. The D&I Railroad reports slide areas near Hawarden and Akron which will require the placement of riprap for bank stabilization. A bridge at MP3.3 near Elk Point experienced some wash out at the piling base on an end bent. The damage was repaired by back filling and placing riprap. Numerous slow orders have been placed as a result.
The News From Pierre 10/6/95
Fri, Oct 6 1995 By David Voeltz on group misc.transport.rail.americas
THINGS THAT GO BUMP IN THE NIGHT - The Dakota Southern continues to operate its trains after dark. Apparently, this is an attempt to minimize the affects of the sun on the rails. As cooler temperatures return to the Dakotas, more day time operations are anticipated. As witnessed by the author, the train is more impressive looking at night as it sprints (limps???) across the prairie at an impressive 10 MPH.
MRC RAILROAD REHABILITATION - The track surfacing, tie installation program and the bridge end repair element of the MRC Regional Rail Authority rehabilitation project resumed early this spring. The three significant spring blizzards and continuing spring rains severely curtailed the production schedule through May. The last nine miles of ballast was distributed between Reliance and Kennebec in mid-June. The track surfacing program was completed the first week of July and the tie program and crossing repair elements were completed on July 17, 1995 .
News from Pierre
Mon, Apr 29 1996, by David Voeltz on bit.listserv.railroad
RECYCLING II PROJECTS - The Transportation Review Task Force studying current SD Department of Transportation operations has recommended the salvaging of the former CMStP&P rail line from Caputa to Kadoka, SD. and from Napa Junction to Platte. Since the task force feels that the amount of traffic generated in the Black Hills can only support one rail line (DM&E) and since rail banked line is badly eroded and has suffered from thefts of rail and bridge lumber, it is in the state's best interest to salvage what materials remain. The same thought applies to the Platte to Napa Jct. line. While in better physical condition, there is not enough traffic to justify keeping the line.
South Dakota Rail Abandonment
Wed, Jul 17 1996, by David Voeltz on bit.listserv.railroad
The South Dakota Railroad Board met by conference call on May 31, 1996 to discuss the salvage of the rail lines from Napa Junction to Platte and from Caputa to Kadoka. The Railroad Board requested Department staff to research legal questions regarding the salvage of these lines and disposition of the right-of-way before seeking Board approval of such action. Another meeting of the Railroad Board will be held in late June.
Approval Granted To Salvage State Owned Rail Lines
Thurs, Aug 1 1996, by David Voeltz on bit.listserv.railroad
The South Dakota Rail Board has granted approval to solicit bids for the removal and sale of surplus rail materials. Nearly 170 miles of state owned but unused track is for sale. One set of tracks runs about 89 miles from Platte to Napa Junction, which is north of Yankton, and the other set is about 84 miles in length and runs from Kadoka to Caputa., southeast of Rapid City. The Dept. of Transportation will open bids on July 30th for these rails, ties, side track, switches, crossings, and bridges.
A pre-bid conference was held July 23 in Wegner and 18 or 19 people from all over the country expressed an interest in the property. No locomotives or rolling stock are on sale and the line from Napa Junction to Platte has not seen regularly use since 1979.
A Day in the Life of a Short-line Railroad
by Bruce Hope, ca. 1999?
Note: The following articles originally appeared on the “stories” section of the South Dakota Store website (www.sdstore.com). Original source unknown.
Last Sunday, the Huff brothers had their first day off since August. There was enough rain Friday that they made the decision to take a little break. (Rain softens the ground enough to cause rail shifting and increase chances for derailment.)
"We’re pretty much caught up," Dick Huff said.
As of Sunday, Dakota Southern Railway (DSR) still had 13 cars to pick up in Reliance, and 22 cars in Presho, as well as some grain to be delivered from Chamberlain. Rich Bauer was leaving that morning with 26 cars, adding four loads of soybeans in White Lake and seven loads of corn in Mt. Vernon. But, caught up for the most part.
The main product shipped by the Huffs is wheat, which goes east to domestic flour mills, or to the Gulf Coast where it is shipped to Asia. (South Dakota isn’t big into durum wheat for pasta products, but North Dakota is.) Farmers Union Co-op Elevator manager Todd Yeaton says that the one 26-car train hauls away about 86,000 bushels of wheat. This amounts to around 1,700 acres of wheat. Some farmers have as many as 3,000 acres, but the average in this area is about 1,000 acres.
The wheat harvest is primarily July and August. The beans are done, for all practical purposes. The corn is just getting a good start. “Overall, the harvest has been good to excellent,” Alex says, “and there has been so much additional storage built that we haven’t been stressed, transportation-wise.”
“Now you drive west on the interstate, and reach a high point near Lyman, and you notice all these shiny steel bins reflecting back to you. In Mitchell this year, there were 10 times as many built as last year,” he adds.
Many rules of the rail were determined in the 1870s, according to Alex. They have some rail on their line that was laid as early as 1906. “It is too light to safely run more than about 10 mph (the GM engines weigh 180 tons, develop 1,750 horse-power, carry 2,400 gallons of fuel, and are capable of about 65 mph),” Alex explains. DSR track is typically 65 pounds per lineal yard, while the track used by modern coal trains, for example, is about 132-36 pounds a lineal yard. Even though Dakota Southern trains are held to a maximum of 10 mph, to correspond with the weight (size) and condition of the track, they still offer a valuable service to local farmers and other businesses.
“Country roads are not the interstate either, but they still serve a purpose,” Alex says.
“The railroad opens up additional markets,” Dick says, “keeping smaller elevators competitive with larger elevators.”
Alex Huff explains why Dakota Southern doesn’t move all of the corn there is to be moved in this part of the country. Since DSR is on the western boundary of the Corn Belt, he says there is a truck market for westbound corn – for feeding cattle, for instance. Another reason is that a lot gets consumed locally.
Yeaton says that in this part of the country, on-farm storage amounts to only one-half to two-thirds of the harvest, while some areas elsewhere can hold the whole harvest. The yields this year, according to Yeaton, are 55 bushels/acre for wheat, and 45 for beans. Corn will be about 110 bushels an acre on average, he predicts.
The Short Line Bottom Line
“A railroad gains efficiency as it increases volume,” Alex says. “We are something of an anomaly, considering our low volume and number of miles moved."
Major rails don’t bother to compete in hauls less than around 200 miles, Alex explains, whereas Dakota Southern has to compete for hauls that average about 70 miles.
As with any small business, survival involves mastery of a complex set of data. And maybe some luck. “Like any small business, we wear a lot of hats ... put in a lot of hours,” Alex says. “It helps to be single.”
The Huffs face a significant hurdle in the fact that they have no alternative connections. They only connect with one railroad, the Burlington Northern Santa Fe, at one location, Mitchell. “We’re captive to one railroad, and they’re not going to give competitive rates,” Alex says.
One thing that’s being discussed in Washington, D.C., according to Alex, is something called “open access.” Just as deregulation allows different telephone companies over the same wire, the same thing could apply to rail traffic. Even though this would give elevators in this area a choice of more than one rail line, they support the concept.
Qualified operators could run it like a toll road. Dick explains that he recently attended a meeting at which the chairwoman of the federal Surface Transportation Board said she expects legislation to be introduced next Congress. She didn’t have any forecast concerning passage, but the Huffs will remain hopeful. Dick notes that she predicted grain would be piled on the ground this year, and that the problem would be lack of market, not transportation shortage. That’s the way it’s been, according to Dick: a slow year because of slashed Asian demand.
“There are only two railroads in the west,” Dick explains, “and we’re about to have only two in the east, so there is the fear of monopoly, or at least oligopoly. This is why you’re beginning to hear rumblings in Washington, D.C.”
“What’s really hurt us this year,” Dick says, “is the ‘Asian Contagion.’ This was the main destination for much of the grain. When the economies collapsed, it had a serious effect on the grain prices in this country.”
As of Sunday, the Huffs had rail cars en route to Washington, New Jersey, Texas, Alabama and New York. The typical round trip is about 28 days, Dick says. He adds that they’ve had a train sitting in Kansas since Oct. 2. “So much business is being funneled into Beaumont, Kan., we’re sitting there full of wheat. They are backlogged loading ships. We’re not too happy about that.”
Grain Grading
The grain is graded (“probed”) on the basis of protein content, foreign material moisture, and a very complex value called “falling numbers.” The federal lab that tests the grains is based in Aberdeen with a satellite office in Marion. Bigger places, like Mitchell, that load 110 cars in 15 hours, need on-site inspectors.
Alex notes that grain is sold on “destination grade” if it is trucked, but is graded at the point of origin when hauled by train. (This is to prevent an unscrupulous trucker, or company, from picking up a different load on the way to market.) Of course, the grain sample at point of origin can’t be taken by the elevator. The graders are private entities licensed by the federal government and given a market territory, to prevent competing grading companies from sweetening up the grade to get business. All this is to be sure the elevator manager has confidence of knowing what he’s selling, according to Alex.
“Truckers will not want to sit for 24-48 hours, so they’re pretty much stuck with the buyers’ grade,” Alex says, and the two say they have heard stories about elevator operators who are pretty certain they sent a better grade of grain than what was paid for, but they agree that, as Dick puts it, “you’re only going to stick an elevator about once.”
Movin’ Out West
Alex got the idea of railroad work while playing cards with a guy in Vietnam who worked for a short line railroad (like Dakota Southern) in Michigan. Alex went to work there after the war. Then he worked in New Orleans. Then he got involved in the formation and management of a short line in Michigan. They would eventually sell out their interest there to buy the Dakota Southern.
Alex and Dick Huff moved to South Dakota under unusual circumstances. In 1980, the state was “caught in a firestorm,” and had to buy a lot of track (by imposing a one-time sales tax hike). Alex says this is an anomaly. The first state in modern times to do so was Vermont in the 60s, but few states have bought up the amount of track they did in South Dakota. It started in 1976, with seven bankrupt railroads in the Northeast. (Just recently, Oklahoma, for example, just bought 150 miles of Burlington Northern track.)
Prior to 1980, a railroad had to provide six years of employment to anyone working on the railroad, or at a job affected by the railroad. This was seen as the starting point for negotiations between buyers and sellers, and was the result of unions faced with trying to maintain jobs in a declining industry. Who would continue to provide job security for employees? Another prohibitive factor, according to the Huffs, was the fact that the process required when abandoning a stretch of track was made very elaborate and adversarial.
Having no union to contend with makes Dakota Southern more flexible. A union would not allow employees to cross craft lines – an engineer who ran locomotives could not work on maintaining that engine, for example – and this is something DS employees continually do.
The Huffs were from Illinois originally, and Alex Huff was originally hired by L. G. Everist in the early 80s to set up a private rail system to haul rock from Dell Rapids to Sioux City, after the Chicago, Milwaukee, St. Paul and Pacific had gone bankrupt in 1977. All rail service south of Aberdeen was discontinued in South Dakota in 1980. (A resurgence in short line railroads was beginning to take place nationwide at that time.) They operated the Platte line from 1985-89, and even acquired another line in the northeastern part of the state during that period.
Meanwhile, Burlington Northern decided in 1986 that they didn’t want to run on such a light track as the line from Mitchell to Chamberlain. Members of the rail authority had observed the operation of the Platte line, “and they figured we knew what we were into,” Alex says. So, they were invited to take over a third line in 1987 (Dick was an absentee partner until coming on board full-time in 1989). “Suddenly we had a very full plate,” Alex marvels. They would later exercise their options to terminate agreements with the other two lines, since their real focus had always been the Chamberlain line.
The Rail Authority is an oversight body, with representatives from counties and other entities. The state leases the track to the Rail Authority for a dollar a year, and they lease it to the railroads for a dollar a year. But maintenance of the track must come out of the freight revenues.
Since Dakota Southern has some track as old as 1906, one might wonder if the stuff ever wears out. In fact, it depends on the location and traffic. “Life expectancy of track on sharp curves, with a train every 30 minutes, may only be 18 months,” Dick says. “On the other hand, there is track near Plankinton that was rolled in 1898. It’s strictly how much use.” When the Huffs need to replace track, it is due to a flaw, a break here and there. They have not found it to ever really wear out. The best mile of their track is the bridge over the river, which they think is probably the longest bridge on the Missouri River.
Short Line Sidelines
The biggest concern a railroad has, according to the Huffs, is a surge in export demand that would bring old stored grain into the market during a strong harvest. “It’s like the typical spring flood scenario,” Dick says, “where it rains in the mountains on top of a lot of melting snow.” This happened around 1992, when Dakota Southern was leasing locomotives from Burlington Northern to handle the extra flow. “The only reason they leased them to us, was that they wanted the grain,” Alex says.
Dakota Southern hauls mostly grain, but also hauls a little rock. They hauled the rebar for I-90 west of Oacoma to the top of the hill. They also hauled the rock for the new Oacoma streets.
They also have a unique agreement with Universal Packaging, who recently located just northwest of Mitchell, one half mile from the end of Dakota Southern’s rail line. Universal Packaging, based in New Hampshire and recently acquired by Adolf Coors, will become the largest building in Mitchell with its current expansion plan.
Schwann’s Ice Cream cartons are made there. Red Baron Pizza cartons, Lunchables, and 9 Lives Cat food. This latter carton is one of many produced in several languages, including Russian. Alex thinks out loud, “Interesting ... there are still people in Russia who can afford imported American cat food.”
DS keeps their switch engine at Universal Packaging to turn cars around. Huge rolls (six feet in diameter) of heavy glossy paper come into the yard in boxcars from Alabama, Arkansas, etc., and sometimes the boxcars have to be turned on a turntable (one of only two left in the state) so that the doors through which the rolls were loaded are facing in the right direction to be unloaded at the carton factory. Dakota Southern has a part-time conductor in Mitchell who operates the switch engine, or one of them drives there if he is unavailable.
For years, the Huffs have provided instructional sessions and train rides for school groups at the end of the school year in the spring. They have an agreement with Mark Kothenbeutel of Omaha, who owns the passenger cars used for rides across the river during the Lewis and Clark Festival in Chamberlain-Oacoma last year. In exchange for storing the cars, the Huffs have access to their use for schoolchildren.
They own five road locomotives, two switch engines and 23 rock cars. They lease another 165 100-ton cars, and employ 11 people year-round. They hauled about 5 billion bushels of grain – their major commodity - last year. They operate on 187 miles of track, from Kadoka to Mitchell.
Parked near that yard are a couple of "highrails" – those familiar highway/railway vehicles. Across the street is large orange truck the Huffs have determined to be "the ugliest truck in Chamberlain, and probably the state." But its winch will lift the front end of a locomotive, and that makes it the most powerful winch in town.
And nearby is the oldest working piece of equipment in the yard, a "Jordan spreader" – a 1937 snow plow/ditcher.
Their yard, like their office quarters, are what some might consider cluttered. But they know where everything is. "One thing L.G. Everist taught us," Alex says, "is to keep a large bone yard."
So what do you suppose these two eligible bachelors did on their first day off since August? Caught up on paperwork, of course.
No More Hauling For Railway Firm
From the 4/12/99 ABERDEEN (SD) AMERICAN NEWS
CHAMBERLAIN (AP) - Dakota Southern Railway will no longer haul grain between Kadoka and Mitchell. The Chamberlain-based shortline railroad will still travel the tracks to take care of some business, but grain transportation will no longer be part of its business.
"We don't plan to go away. We'll just be greatly downsized," said owner Dick Huff.
The decision to discontinue grain hauling was made official at a recent meeting of the regional rail authority, but grain hadn't moved along the Dakota Southern Railway lines since the end of January. "We were really just making formal what was already de facto. The elevators had already ceased shipping by rail because (Burlington Northern Santa Fe) rates made it prohibitive," Huff said.
All track in the state is owned by the state and leased to rail service operators. Other operators may use the same track for a fee if the "host" allows it, Huff said. BNSF operates rail service from Mitchell to Sioux City and other points. Once Dakota Southern cars reach Mitchell, grain shippers are dealing with BNSF. Dakota Southern owner Alex Huff said the BNSF rate structure has changed. "(Grain) loaded in one of our cars . . . moves at a higher rate than grain moved in one of their cars loaded in Mitchell. That in essence makes us uncompetitive," he said.
Dakota Southern Railway was formed in 1985 and operated a rail line that goes through Wagner to Platte. In 1987, it started service from Mitchell to Chamberlain, and that was extended to Kadoka in 1988. The Wagner/Platte line was abandoned in 1989.
The Mitchell-Rapid City Regional Rail Authority leases the Mitchell-to-Kadoka track from the state and then subleases it to Dakota Southern. Tom Greenway, rural Mount Vernon, chairman of the rail authority, said the decision to discontinue grain hauling is disappointing.
"We tried hard to make it work, but it's a series of problems. It's just not working out at the current time," he said.
Huff said the problem began more than a year ago when BNSF established that its best, rates would apply only to BNSF cars loaded at a BNSF-served facility.
The Mitchell Farmers Co-op Elevator, for example, spent $3, million over two years to renovate tracks, build concrete silos and upgrade the leg system that loads the grain in and out, all in order to handle 108-car trains. Continental Grain in Emery also constructed a high-speed, train-loading facility to handle the large unit trains
The end of the line for DSR?
Author unknown, published ca.1999
Alex Huff changed hats to speak to the LFCDC on the subject of Dakota Southern Railway’s discontinuation of grain hauling services between Kadoka and Mitchell.
Although the shortline railroad, owned by Huff and his brother Dick, has not moved any grain since January, the official date chosen for discontinuation was April 1.
"The reasons are largely external," Huff explained, citing a Wall Street Journal article about the changes and monopolies in the railroad industry. "The industry has basically coalesced into two large railroads in the West."
The Huffs have been aware of the problem for a long time, and finally decided to quit while they were ahead. The railroad is operating in the black and has no long-term debt. "This is probably as low cost an operation as you will find in our line of work," Huff said, "but the way the system is currently rigged, there’s no economic incentive for shippers."
The Huffs have made the Governor aware of the problem, but have made no headway so far. They have tried to meet with the Secretary of the Department of Transportation, Ron Wheeler, but he has been too busy.
The problem is that Burlington Northern and Santa Fe monopolizes the rail service from Mitchell to Sioux City. Huff believes that the rails should be opened up to competition - like electricity, like utilities - making them like toll highways. The shipper would pay a fee to the owner of the rail line, but would have access to alternative carriers.
Especially considering that the track in South Dakota is mostly owned by the state, it doesn’t make sense not to open the rail lines to competition.
"Burlington Northern lacks the confidence in their own pricing decisions to allow them to be tested in the marketplace," Huff says.
"Monopoly brings economic inefficiency, resistance, and a lack of innovation," he added.
"The farmers end up paying, because of lower prices, higher taxes (because the roads are damaged by trucks)," he says.
"And there is damage to the local infrastructure," he concludes. "The farmer doing the trucking with his own semi is not likely to shop locally."
An example of the way the lack of competition hurts everybody, Alex explains, is during the busy periods when Burlington Northern runs short of locomotives. When there is a string of waiting rail cars, fully loaded with grain, "they have a choice to move our cars, or their own. Which do you think they choose?"
The biggest problem is getting the grain moved out of South Dakota, Huff says. Sometimes it will sit for as much as two weeks in Mitchell. Once it gets to Sioux City, there is access to alternative shippers, so the grain moves much more efficiently.
The Huffs would like to see competition in the state and on their own line as well. "We don’t claim to have all the answers," he said. "But it should be the same as electricity - the owner of the wire should be compensated adequately, but the line should be open," Huff said, citing Isabel Benham, the most highly-respected, long-term advocate of this philosophy. "She is a retired stock analyst who specializes in railroads," Huff explained. "Her papers are now in the St. Louis Mercantile Library."
"Her ideas look good from the viewpoint of a company’s stockholders," Huff says, "but may not look as good to an engineer making $100,000 a year with one of the major railroads."
Huff estimates that opening of the rail lines would reverse the shipping patterns. Instead of 75 percent trucking, the grains would be shipped by rail 75 percent of the time. In a state that is highly concerned with the impact of overloaded trucks on the roads, Huff suggests that this should seem an appealing alternative.
As to the impact on the trucking industry, Huff says it’s a blip on the radar screen. He noted, however, that the news of their discontinuation of grain hauling immediately spread across the region on CB radios.
According to Chamberlain Elevator manager Todd Yeaton, all the elevators along the line will be seriously impacted. "I shipped out about 200 cars last year. Kennebec shipped at least as much - Draper, Vivian, Murdo, Reliance, Presho, White Lake, Mount Vernon - take that total times four, and that’s the number of new grain semis we’ll have on the highways now. An illegally-loaded truck does damage equal to that of 9,000 cars."
"For the last couple of weeks, it’s been advantageous to ship by rail, but the way the rate structures have been running, DSR is about a six-month railroad -- through no fault of theirs."
The elevators are all offering their support of DSR, and have offered to go to Pierre to help plead the case with the Governor. Rail shipping often makes a shipping difference of 35-40 percent, and in business with slim margins, that’s all the difference in the world.
"We’re screwed," Yeaton said, "for lack of a better term."
"All the large grain companies want to eliminate the middle men," Yeaton says, "which is us. They want the farmers to store the grain and ship it themselves."
The elevators will have to truck grain now, and are looking long and hard at the numbers to see how many trucks they need to have running. Yeaton has two trucks running, and is looking at the feasibility of buying three or four more. "We lost our preferred mode of transportation," Yeaton said, explaining that he’d much rather load 26 train cars in a week than 100 trucks a month. "You can get a train, 86,000 bushels, out in a 12-hour day, but to get out 86,000 by truck takes a month."
"This raises costs and time investment considerably," Yeaton explains, "and will double our storage problems."
The elevators prefer train transport for another reason, as well. Yeaton found this out the hard way when a truck shipment of grain going to Minneapolis wasn’t the same grade by the time it got there. So he didn’t get what he should have for the shipment. Grain hauled by rail, on the other hand, is sold based on origin grade.
When they began Dakota Southern 14 years ago, the State told the Huffs they wouldn’t last six months, but they have survived. They do not like the idea of increased regulation, but they would like to see a level playing field.
Alex believes that the railroad industry nationally may have been short-sighted in all of this, judging from the mounting public resentment.
"They might in response to negative public opinion decide to cut us some slack, but they have no legal obligation to do so."
The best solution, according to Huff, is to be granted "overhead rights." "We could use the track for a fee," he says, "but couldn’t stop to pick up grain along the way."
The solution will probably take federal legislation, Huff says.
Dakota Southern will continue its lease of the track between Kadoka and Mitchell, and will continue maintaining that track (which includes weed control), but they will be looking at other possibilities for the future.
"This may be a little overstated," Huff says, "but we have a railroad and no track (or more precisely, no economic reason to operate)."
For the time being, Dakota Southern will be able to trim its operation enough to subsist on revenues from the piece of track near Mitchell that is used by Universal Packaging Company, now Mitchell’s largest building and expanding. Universal, who makes the cartons for Schwann’s Ice Cream, various pizzas, etc., must traverse the small section of track and often must rotate their cars on the Huff’s turntable (one of the last two in South Dakota). Because the paper comes to Universal in rolls that are six-feet thick, they must be unloaded from the same side they were loaded into the cars. So the car comes with a designation from the shipper - "Open This Side Only."
"It’s amazing how high-tech it is," Alex says. "The machine comes from Europe, and paper goes through it at a rate of 700 feet a minute."
DSR will haul in two more trainloads of rock for the Redi-Mix Plant in Chamberlain to fulfill contract obligations, but from now on Donny Steckelberg will have to truck in rock. "This will mean higher-priced concrete," Huff says.
Steckelberg, who had hoped to attend the eventful LFCDC meeting Tuesday morning, says, "It’s going to drive up prices considerably. The freight on my rock has been very reasonable. I’m only going to recoup a part of that cost by raising prices."
"I’ve looked at alternatives, and nothing comes close," Steckelberg says.
"Unless they can get something worked out with the Sioux City connection," he adds, "we’ll be putting a lot of weight back on the interstate highway."
"And if they shut down completely, it may be difficult to find someone to take it over," Steckelberg said. "Dick and Alex are unique in their interest in such a short line railroad."
State reaches agreement with BNSF for CORE railroad line
PIERRE, SD- (April 28, 2005) Gov. Mike Rounds and officials from the BNSF Railway Company (BNSF) recently announced a settlement agreement that paves the way for the sale of the state-owned Core railroad line to BNSF, while providing enhanced transportation access to markets for South Dakota shippers and producers of agricultural products. The acquisition price is .64 million reduced by the value of the properties retained by the state. The sales agreement is subject to approval by the Surface Transportation Board.
"This is great news for our farmers and shippers in South Dakota," said the Governor. "In 1986, the state of South Dakota and BNSF entered into a contract regarding the operation of the Core railroad line in South Dakota. This contract included a formula allowing the BNSF to purchase the Core line under specific conditions at a time of their choosing. BNSF has exercised their option to purchase the Core line. As a condition of the sale, we negotiated a settlement agreement protecting and expanding access to the Core line for our South Dakota shippers. This agreement also settles two pending law suits involving the Core line."
The 368-mile Core line runs from Aberdeen to Mitchell, Mitchell to Canton, Canton to Sioux Falls and Mitchell to Sioux City.
"BNSF is pleased to have resolved with the State a win-win outcome that enhances rail service options for shippers in South Dakota and supports our continued investment in the Core line for the future," said Peter J. Rickershauser, BNSF Vice President, Network Development. "The purchase of the Core line will mark the next step in our successful partnership with the State and freight rail shippers over the last two decades to revitalize and upgrade these once abandoned rail lines. We look forward to continuing helping to grow business in South Dakota and to investing in this line as an integral part of our extensive western rail network." In addition to the purchase of the Core line, BNSF has agreed to allow certain access rights to the Core line by smaller, South Dakota based railroads. While all of these access rights are important, the most notable is expanding access through the BNSF transfer point in Aberdeen. This agreement will allow agricultural product shippers in South Dakota access to additional markets.
The state of South Dakota purchased the Core line from the Milwaukee Road in 1980. In 1981, the state and BNSF entered into an agreement in which BNSF would provide rail service on behalf of the state on the Core line for five years. In 1986, a new agreement was reached in which BNSF agreed to continue operations and the state agreed to allow BNSF to purchase the Core line.
A subsidiary of Burlington Northern Santa Fe Corporation (NYSE:BNI), BNSF Railway operates one of the largest railroad networks in North America, with about 32,000 route miles covering 28 states and two Canadian provinces. BNSF is an industry leader in Web-enabling a variety of customer transactions at www.bnsf.com. The railway is among the world’s top transporters of intermodal traffic, moves more grain than any other American railroad, transports the components of many of the products we depend on daily, and hauls enough coal to generate about ten percent of the electricity produced in the United States.
Trains could return to area thanks to State agreement
By Lucy Halverson, Lyman County Herald, May 2005
The recent announcement by the governor that an agreement has been reached with the BNSF Railway Company may pave the way for trains to return to service in Lyman County.
According to Alex Huff of the Dakota Southern Railway, the agreement states that access rights must also be given to smaller South Dakota based railroads like Dakota Southern. "As part of the conditions to sell the CORE railroad line to BNSF, agreements must be made within the next six-months with the smaller railroads around the state," Huff stated.
Dakota Southern leases the line from Vivian to Mitchell and has continued to maintain the line for the past six years. "Frankly, I wasn’t too optimistic that we’d ever see trains running on this line again," added Huff.
How to spend the money: legislators grumble
It's too soon to fret about railroad sale
Some cranky (South Dakota) legislators are rattling their sabers, saying they want to have a say in how money from the sale of a state-owned railroad - $41 million - will be used.
Gov. Mike Rounds says they will.
"Like any other income to the state, the proceeds will be subject to the appropriation process," Rounds said.
So it really doesn't matter that a lawyer for the state Transportation Department said early on that money would go into a railroad infrastructure trust fund, does it? That lawyer isn't the person in charge.
Rounds might recommend that. Or he might not.
Legislators might go along with such a recommendation. Or they might not.
Let's quit the whining until there's a problem. - Editorial Opinion, The Sioux Falls Argus Leader, courtesy Larry W. Grant
Rail sale boosts S.D. trains Deal with BNSF may get products to more markets
TERRY WOSTER , Sioux Falls Argus Leader
twoster@midco.net
Article Published: 03/17/06, 2:55 am
PIERRE - Desperate 26 years ago to save access to at least some basic markets for farmers and other shippers, South Dakota bought a railroad.
Last December, when the state sold a big chunk of the track it had bought in 1980 to the company that has been operating the line, part of the deal made sure that other railroads operating in South Dakota would have access to routes that lead to both coasts, Canada and the Gulf of Mexico.
The sale, in which BNSF Railway got 368 miles of track for $42 million, included a series of negotiated agreements that give other rail operators in the state rights to use parts of the BNSF track for their own shipping. The long-term result, supporters of the transaction say, will be access from South Dakota to every one of the major railroad lines in North America. That could mean more competition, faster delivery and better deals for shippers.
"We're never going to get a big population out here," says Ron Mitzel, a state Railroad Board member and official with Dakota Mill and Grain in Rapid City. "To attract industry or anything for economic development and jobs, whatever you're making needs to move to the population, and the most efficient way to do that, especially long distance, is rail."
Todd Yeaton of Highmore is equally enthusiastic.
"This (agreement) has opened doors to shippers we've never had and never seen," Yeaton, chairman of the rail board, told legislators when they were arguing over what to do with proceeds from the BNSF sale. "We have in South Dakota for the first time the opportunity to hook up with every single Class One railroad in North America."
Class One railroads are the largest in the country. There are seven, including BNSF, according to NationalAtlas.gov. The site says that in 2002, those seven railroads were just 1 percent of all U.S. freight rail lines but had 92 percent of freight revenue, 70 percent of the miles operated and 89 percent of employees. Growing in importance That access could be increasingly important in South Dakota. While the proposed multibillion-dollar expansion of Dakota, Minnesota & Eastern into Wyoming coalfields has been talked about for years, other economic development in the state often includes a rail component. Ethanol plants and soybean processing, for example, frequently require new railroad siding - or a short track used for loading - to be built. One siding can be a $1 million project, and recent developments such as 110-car unit trains mean longer and longer sidings in the future.
Some rail advocates say that as motor fuel prices increase, trains become a more attractive alternative for shippers.
Karla Engle, a lawyer for the state Department of Transportation, drew the assignment of briefing legislators in the recently ended session on details of the sale and the opportunities it offered.
"It's a huge, huge advantage for our shippers," Engle said as she outlined how the deal gives railroads the right to cross and use BNSF track and, in some cases, to have that company move the cars of other companies.
Spoils of the sale
The 2006 Legislature and Gov. Mike Rounds fought over political control of the $42 million sale proceeds.
Legislators eventually transferred about $38 million to an account they control directly. Railroad board members, caught in the middle of the fight, wanted to preserve the fund. The increased access to markets offered in the rail sale means more trackside development and more demands for loans, they argued.
Mitzel said board members worried that the political fight over the fund would overshadow the coming need for new track, heavier bridges and more sidings for ethanol and biodiesel plants, all of which might be funded with loans from the trust fund.
"If you stick money into rail, it's there for 50 or 100 years," he said. "It isn't something you have to go back and do every five or 10 years."
Don Larson, a Brookings County commissioner and head of the local regional rail authority, says his group first got a trust-fund loan for siding work associated with the soybean processing plant at Volga. At the time, the DM&E was running about 500 carloads of business in the county, he said. The 2006 estimate is for 20,000 carloads of freight in the county.
Opportunities
Jack Parliament, president of D&I Railroad, which generally runs between Dell Rapids and Sioux City, sees opportunities for huge expansion along that line with the rail-sale agreement. The deal opens the way for the line to access three different Class One carriers at Sioux City, he said.
"In the past, shippers along the line only had access to BNSF in Sioux City," Parliament said. "Since the sale, it's created numerous opportunities for the shippers."
He said the Canadian National and Union Pacific are "clearly interested in getting into the Sioux Falls market to provide some competition."
That could mean development along the north edge of Sioux Falls, where D&I is located.
Parliament also said two "major shippers" he wasn't at liberty to identify yet are in the process of deciding whether to locate along the line between Canton and Elk Point.
"If those two businesses do locate ... that could nearly double our existing business," he said.
Parliament is on the railroad board. He told legislators during a discussion of the trust fund that recent meetings of the rail board have included as many as a dozen shippers showing an interest in using the idle line from Platte to Napa Junction near Yankton.
Dakota Southern's line from Mitchell to Kadoka has been idle, too. The part of the line from Kadoka to Rapid City is banked, meaning the state still owns the right-of-way but has removed and sold the steel rails. Rail board members expect new activity on at least the part of the Dakota Southern from Mitchell to perhaps Murdo.
"Fifteen years ago we were loading cars on that track, but it took too long just to get from Murdo to Mitchell," Mitzel said. "It just needs to be upgraded so (trains) can stay on the track and go 5 mph to 10 mph and get to Mitchell in half a day or a day. Then you can start to sell a service." $20 million trust fund
The trust fund was left with $18 million to $20 million.
Republican Rep. Ted Klaudt of Walker was one of those who argued for taking more money out and placing it in legislative control. He said nobody cared about the trust fund until the rail sale.
"We cashed in the golden cow, and so we have all these plans, spur lines and whatever else, to spend it," Klaudt said.
Republican Rep. Gordon Pederson of Wall is the only legislator still serving who was also in office when the state bought the core line. He tried to thwart the raid on the trust fund.
"I was here when the railroads were dying," Pederson said during floor debate in the House. "We put on a sales tax to get it going. We got it done. It's a good railroad, and it's done quite a bit. Now, it looks like we may be able to get our cars out of South Dakota. And if we can get our cars out of South Dakota with our grain in them, it's going to help our people. You're not going to have any industrial development, any economic development, any rural development unless you have good transportation. We are in a transportation desert, and for cripe's sake, let's get out of it."
Reach Terry Woster at 605-224-2760.
RAILROAD TRUST FUND
The Railroad Trust Fund was created in 1981. Its revenue comes primarily from lease payments by companies that operate on state-owned track. It is used as a loan program to help regional rail authorities with such projects as upgrading track or building sidings.
Balances in the fund, since fiscal year 2000: Fiscal year 2000 $6,656,019
2001 $8,458,741
2002 $9,492,645
2003 $11,688,931
2004 $17,658,048
2005 $18,303,629
2006 $56,760,025
- South Dakota Department of Transportation