DME Problems Exposed Infrastructure Needs

The FRA decision to reject DM&E’s loan request should be applauded in that they made a merit-based decision as opposed to the back door efforts to fund this project by Senator Thune.

The DM&E loan proposal highlighted a number of issues that need to be addressed. What is the future of rail in the US? And, what responsibility does the government have to provide funding for railroads?

The magnitude of this loan and the viability of the carrier concerned many fiscally responsible people. Yet, historically government has supported rail … and there is no reason that it should not in the future. But what is needed is a rational plan that does not favor one company over all others.

The railroads were built for the 19th Century; Congress needs a comprehensive plan for the 21st Century. Congressman Oberstar proposed legislation last session entitled the Railroad Track Modernization Act of 2006 and Transit Rail Accommodation Improvement and Needs Act. It 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.

DM&E is in trouble as reflected in yesterday’s stock performance by LB Foster, which owns 13.4% of the DM&E diluted stock and saw its stock value drop 21 %. DM&E currently serves a market and it needs to address its safety record and operation.

Before Thune attempted to hijack the Federal Railroad Authority's program in the 2006 Transporation bill with provisions to "alleviate rail capacity problems" and removed any prohibition on the size of any single loan, it was designed to help railroads fix existing track with impetuous that small railroads would need the monies. That is still true today.

As a fiscal conservative, I opposed a loan that would create a market imbalance while rewarding one company while other railroads are investing in their businesses. However, I do support the orginal provisions of the FRA program. But any Congressional action should be done in a transparent manner that is based on merit and not lobbyists influence.