Sunday, August 27, 2006

Gutknecht or Oberstar - Who's got the better RAIL Plan ?

At Gil Gutknecht’s DM&E /FRA meeting in Rochester last Friday, Kevin Paap, a Garden City farmer who represents 30,000 farmers as president of the Minnesota Farm Bureau, said "Farmers across southern Minnesota are waiting for a bigger, better rail line to get crops and renewable fuels such as ethanol to market more efficiently.”

As I stated in a previous commentary, ( ) I addressed how the movement of coal will not help 2.3 million electricity consumers in our region and that the farmers are not guaranteed any lower pricing thorough DM&E trains.

However, based on Mr. Paap’s concern, I did a little more searching.

Since Mr. Paap referenced ethanol, as of September, 2005, 40% of the US ethanol production was in Minnesota (16 facilities built or under-construction) and Iowa (with 23 facilities) and it seems that every month another facility is being planned to be built in Minnesota. DM&E currently is one of 23 railroads operating in Minnesota over 473 miles of track out of 4,457 total miles.

So, here is the question, does it make sense for all the money go to one railroad ?

At FarmFest, Gil Gutknecht re-affirmed his support for the DM&E loan program.
From The New Ulm Journal :
“I’ve taken lots of arrows from Rochester people, but I won’t try to kill the (DM&E) railroad project,” said Gutknecht.
The The Rochester Post-Bulletin reported the FarmFest debate :
Gutknecht at one point chided Tim Walz for expressing support for DM&E's expansion, even though Walz said last week that he opposed the $2.5 federal loan sought by railroad President Kevin Schieffer.
Walz said he has always supported the project, but as a fiscal conservative could not support the loan. Asked whether the project was possible without the loan, Walz said, "that's what we need to find out."

A little history, for those of you who may not know the particulars.
The Federal Railroad Authority's program was designed to help railroads fix existing track with impetuous that small railroads would need the monies. The White House, and even the Republican Study Committee (Gutknecht has endorsed these proposals), wanted to cut the budget. But somehow Senator John Thune (and former DM&E lobbyist) changed the TransPORKtation Bill for 2006 by a decimal point--from $3.5 billion to $35 billion. And further, it required the FRA to give priority to projects like the DM&E's that "alleviate rail capacity problems" and removed any prohibition on the size of any single loan. Many legislators were not aware of the last minute changes made by Sen. Thune. There was no up and down vote on this provision. There was no transparency for the public to know what was being discussed.

In May, Congressman Gutknecht wrote a letter to the FRA requesting a review of the proposed DM&E loan due to concerns about the ability of DM&E to repay the loan. The letter was signed by Mark Kennedy and John Kline of the Minnesota Congressional delegation – but notably as reported in The Rochester Post-Bulletin, Congressman Jim Oberstar did not sign the letter. Oberstar sits on the Committee for Transportation and Infrastructure and which would have the ability to direct federal aid for the project. At the same time, candidate Tim Walz stated in that he “plans to work with Congressman Oberstar, the ranking member of the. Transportation Committee, to resolve any lingering DM&E issues.”

So, Oberstar seems to be a critical player. I did a google to see if I could find out Oberstar’s position.

Well, it turns out that Congressman Oberstar does seem to have a plan. H.R. 5965 was introduced into the House on July 28, 2006 and already has 54 cosponsors. {Hopefully, after Congress returns from its month-long “listening sessions”, it will be acted upon.}
The purpose of the bill is : “To strengthen national security and promote energy independence by reducing the Nation's reliance on foreign oil, improving vehicle technology and efficiency, increasing the distribution of alternative fuels, bolstering rail infrastructure, and expanding access to public transit.”
And has as major components :
Railroad Track Modernization Act of 2006 and Transit Rail Accommodation Improvement and Needs Act which would promote Transit Use & Develop a Rail Infrastructure Program that would create a stimulus package of infrastructure investment that upgrades the pipeline for biofuels – the freight rail system – in order to get an affordable and reliable supply of biofuels to market.

Oberstar’s bill seems to be a complete plan addressing the total energy independence issue as opposed to Gutknecht’s limited 10/10 plan.

But, the big difference between Gutknecht’s plan is to put all the monies essentially into one railroad --if the new proposed loan to DM&E is approved, it would hold 91 percent of the loan portfolio.

Compare that to Oberstar’s bill which would allow the dollars for other railroads. Oberstar has more knowledge and experience to know what is best for the country versus the RoveRobot Gutknecht who is rejected his pseudo-fiscal hawk persona at the displeasure of the citizens of Southern Minnesota.

Does it make sense to have one railroad that runs across Southern Minnesota getting all the monies, or to make sure that other railroads have upgraded track to serve the other areas of the State and serve other States ? How will ethanol producing facilities in Winnebago, Fairmont, Granite Falls, Little Falls, etc. link up with the DM&E tracks ?

The more and more I look into this DM&E fiasco, the bigger flaws are apparent.
Please read the Fortune Magazine article on DM&E in the March 20 edition ? It is very clear that this was a manipulation by politically connected people to affect the system for DM&E’s benefit.

And, for a political standpoint, the pundits are suggesting that the Democrats have a very good chance of being in the majority in the House. That could be a boon to Minnesota as Jim Oberstar would be in line to be Chairman of the Transportation Committee and Colin Peterson could be Chairman of the Agriculture Committee. So wouldn’t that say that farmers should be supporting Tim Walz ?

Sources :
Kevin Paap quote

New Ulm Journal FarmFest story

Rochester Post-Bulletin story of Gutknecht letter

Walz statement on DM&E loan

Oberstar PROGRESS Act

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